Advice please - which mortgage account do i overpay on?

garlicbread99

Hi - hope you can guide me in the right direction?

I have 2 mortgage accounts with HSBC both at 2.99% interest.
1) is a £86,500 repayment mortgage with 16 years remaining.
2) is a £60,000 interest only mortgage with 16 years remaining.

I'm paying approx £200 into equity ISA's each month which have approx £20k in them and should easily repay the interest only element.

I would like to make some overpayments on my mortgage and dont know which is the best account to make the overpayments on?

HSBC permit an overpayment of 20% of your monthly payment without incurring a charge. I currently pay £555 per month on the repayment and £150 on the interest only.

Any guidance would be hugely appreciated!!! Thanks!!

originalmiscellany

As they're the same interest, I don't think that it would actually make a difference - that said I'd clear the repayment one, as you'll see a bigger reduction in the amount you pay ever month; that said, whether you pay off 1 or 2, you'll still owe exactly the same!

garlicbread99

Thanks for your reply. I would hope that HSBC wouldnt reduce my payments as i still want to pay the same monthly amounts that ive budgeted for.

dimbo61

I would overpay the IO part as the repayment part is reducing each month and will be paid off at the end of the term!
The IO part remains the same and you HOPE the S & S ISA,s will grow enough to clear the IO mortgage at the end of the term.
Ask HSBC to keep your payments static that way you will overpay more each month