We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
Which mortgage to pay off first?
boyse7en
Posts: 883 Forumite
I've got two existing mortgages, one on my home and one on a BTL. Both are interest only. The home one I am already overpaying every month to reduce the balance. I want to pay off a bit more every month (about £250) but I'm not sure whether to pay more off my home Mortgage, or off the BTL
Home: £88k outstanding: Current rate 1.4%
BTL: £102k outstanding: Current rate 2.25%
Initial thoughts are to pay off the BTL, as it is a higher rate of interest - but the income from the BTL gets tax relief on the mortgage interst payments, so if I pay it down, I will end up paying more tax as the BTL will make more profit.
Bit confused.
Home: £88k outstanding: Current rate 1.4%
BTL: £102k outstanding: Current rate 2.25%
Initial thoughts are to pay off the BTL, as it is a higher rate of interest - but the income from the BTL gets tax relief on the mortgage interst payments, so if I pay it down, I will end up paying more tax as the BTL will make more profit.
Bit confused.
0
Comments
-
Take £1k
pay it off the home is saves £11.40 in interest
pay of the BTL it save £22.50 in interest
with 20% tax you pay an extra £4.50 or £9 for 40%
net £18, £12.50 still better than the home loan.0 -
Or not pay any off any of them and find a better savings rate elsewhere.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 353.7K Banking & Borrowing
- 254.2K Reduce Debt & Boost Income
- 455.2K Spending & Discounts
- 246.8K Work, Benefits & Business
- 603.3K Mortgages, Homes & Bills
- 178.2K Life & Family
- 260.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards