I'm Overpaying 'Big' On My Mortgage But Also Have Debt, Advice Please

Ninian_Park_Veteran

I have a great rate on my mortgage as interest rates stand and am paying 0.17 above BBR for life. I am over paying by about £400 and in doing so reduced the term from 10 down to 7 years, but ...................

I have a loan which I need to pay £140 a month for the next 5 years, doubled with the fact that I now need to take out an additional 8k. Would I be better reverting to my standard payment on the mortgage and restructuring my loan payments ? in total my out going on loans is likely to be in the region of £300 per month.

Any advice appreciated, thanks

bulletproof_1979

Ninian_Park_Veteran wrote: »

I have a great rate on my mortgage as interest rates stand and am paying 0.17 above BBR for life. I am over paying by about £400 and in doing so reduced the term from 10 down to 7 years, but ...................

I have a loan which I need to pay £140 a month for the next 5 years, doubled with the fact that I now need to take out an additional 8k. Would I be better reverting to my standard payment on the mortgage and restructuring my loan payments ? in total my out going on loans is likely to be in the region of £300 per month.

Any advice appreciated, thanks

Yes definitely - just look at the morgage as another type of loan, which is what it is.

You'll undoubtedly be being charged a much larger rate on any other loans - so you should focus on clearing those before trying to make any over payments on the mortage.

HappyMJ

Always pay the loan with the highest interest rate first. You could with your overpayments ask for a payment holiday and throw as much money as possible towards the loans with higher interest rates. Your mortgage is virtually interest free so don't pay it faster than you need to. You'll get a higher return by saving in the bank.

getmore4less

With a loan allready and another needed, you should realy be saving up for things rather than overpaying the mortgage also ou need to build an emergency fund.

With a base+0.17%(0.67%) mortgage and instant access savings available at 2.5% saving is the way to go.

bulletproof_1979

Another thing to bear in mind - for once you've paid off your loans. At 0.17% above base rate you will always be able to get a savings account that will pay a better rate of interest than paying off the morgage will achieve.

In other words instead of making overpayments on the morgage directly, stick the "overpayments" into a seperate savings account until the day you can pay off the mortgage and you'll be better off. You've just got to have the willpower to remember that that money is essentially spent and not available for buying stuff with!! As an added benefit this overpayment money is available as an emergency fund (only for absolute emergencies though!!)

Ninian_Park_Veteran

bulletproof_1979 wrote: »

Another thing to bear in mind - for once you've paid off your loans. At 0.17% above base rate you will always be able to get a savings account that will pay a better rate of interest than paying off the morgage will achieve.

In other words instead of making overpayments on the morgage directly, stick the "overpayments" into a seperate savings account until the day you can pay off the mortgage and you'll be better off. You've just got to have the willpower to remember that that money is essentially spent and not available for buying stuff with!! As an added benefit this overpayment money is available as an emergency fund (only for absolute emergencies though!!)

I'm not that great with savings, unfortunately I like the finer things in life and have little willpower.

bulletproof_1979

Ninian_Park_Veteran wrote: »

I'm not that great with savings, unfortunately I like the finer things in life and have little willpower.

It's not all that hard really, if you can make overpayments to the mortgage it's only a small mental adjustment to send them to a "mortgage payment" savings accounts and treat it as if it's been paid off the mortgage...