Overpaying Interest Only Mortgage?

rosegirl36

To cut a long story short i have a part interest only and part repayment mortgage.Now the Interest only part is supposed to be covered by the endowment but has a shortfall.Endowment misselling is a no go so i have been overpaying the Interest only mortgage by £50 a month for a year or so. I can afford to increase this figure to £100/150 a month.Is this a good idea or is there a better alternative?Mortgage svr is 2.5%

joedenise

I think it depends on the terms of overpayments for both your mortgages. I was overpaying on the repayment part of our mortgage but when I used the overpayment calculator it worked out that if I carried on as I was I will have repaid all of that mortgage during the tied in period, so I decided to split my overpayment between the two mortgages. By doing this the repayment mortgage will finish just after the tied in period and I will then use the whole amount I have been paying on that into the interest only part in order to bring the total down and can be fairly certain that the endowment will pay off what's left and hopefully still have some over.

Denise

Phelpsie001

I think that JoeDenise is right!!

Also, it depends how much your endownment is short by?

rosegirl36

Endowment is projected £12000 short so that is why i want to make extra overpayments, just wanted to consider any better alternatives?

getmore4less

Savings at more than 2.5% net there are a few regular savers that might do this.

dimbo61

Have you got any emergency savings ? as you should be able to get 3% tax free in a cash ISA.
So either you overpay or save as much as possible to cover the shortfall