Which mortgage to over pay?

paulbrannan

Hi,

I have two properties, a flat which I let and a bungalow I live in. The mortgage on the flat is interest only and the bungalow is an offset mortgage. The mortgage on the flat is approx. £44,000 , and on the bungalow about £100,000

My question is that I have a few grand and rather than sticking it in a savings account, I thought it would be better put towards paying off my mortgage - which one would I be better paying off on though?

Thanks in advance

CLAPTON

what are the APRs involved

paulbrannan

On the off set, it's 2.89%.

Ta

paulbrannan

Hello,

could anyone give me some advice on this, please?

Ta

opinions4u

paulbrannan wrote: »

Hello,

could anyone give me some advice on this, please?

Ta

What are the interest rates on BOTH mortgages? Without knowing this we can only toss a coin or guess.

What is your highest rate of income tax?

Are there any charges for overpayments on either loan?

Thrugelmir

How are you intending to clear the mortgage on the flat?

paulbrannan

opinions4u wrote: »

What are the interest rates on BOTH mortgages? Without knowing this we can only toss a coin or guess.

What is your highest rate of income tax?

Are there any charges for overpayments on either loan?

Sorry, the flat is 4.69% , rising to 4.84 next Sept. The over payment charge is 3% of capital repaid.

For the bungalow, it says that I'm allowed to pay 5% of the annual balance and the charge is 4% of the outstanding balance repaid until June, 2013.

Hope this all makes sense.

Thanks

Regarding tax, I'm on basic rate.

paulbrannan

Thrugelmir wrote: »

How are you intending to clear the mortgage on the flat?

I was just hoping to sell it on once the market had risen a bit.

originalmiscellany

Sadly Paul, I think you'll be waiting quite a long time to get to that position
Times are very tough at the moment - and the house cycle is not going to pick up for some time. So the question remains, how are you going to clear the mortgage on your flat if you can't sell it for more than it's currently worth?

RenovationMan

originalmiscellany wrote: »

Sadly Paul, I think you'll be waiting quite a long time to get to that position
Times are very tough at the moment - and the house cycle is not going to pick up for some time. So the question remains, how are you going to clear the mortgage on your flat if you can't sell it for more than it's currently worth?

Do you think that the current housing malaise will last decades and that this chap won't be able to sell his flat before the end of his mortgage term?

I mean, really? :eek:

To the OP, I'd pile money into your offset account so that if anything goes wrong financially (such as a rental void on your flat) then you'll have a large pot of cash to fall back on, or to overpay onto your flat if that's the better way to go in the future (i.e. such as to secure cheaper lending due to improved LTV when remortgaging). It's by far the most flexible way for you to save money.

paulbrannan

RenovationMan wrote: »

Do you think that the current housing malaise will last decades and that this chap won't be able to sell his flat before the end of his mortgage term?

I mean, really? :eek:

To the OP, I'd pile money into your offset account so that if anything goes wrong financially (such as a rental void on your flat) then you'll have a large pot of cash to fall back on, or to overpay onto your flat if that's the better way to go in the future (i.e. such as to secure cheaper lending due to improved LTV when remortgaging). It's by far the most flexible way for you to save money.

Lol originalmiscellany,, I think down the line it will pick up and will certainly go for more than the last, paltry evaluation I had.

Thanks RenovationMan - will have a think on about that.