Mortgage overpayment.

The_Wiggles

Hi. I have two mortgages, one on £22k and one on £20K both on 2.5% interest. I am currently overpaying by approx £1000 a month. Should I pay off the lower mortgage first or the higher mortgage? Many thanks.

Farmerbob

You'll pay more interest on the higher balance so get it down then split the overpayment between the two once their approx the same balance.

Tony_R

It makes no difference. The interest rates are the same and hte overall debt is £42,000. Just because you are overpaying the bigger mortgage will not save you money as they are both at the same interest rate.

The only possibility is if you pay one of before the other and encounter an early redemption fee?

hcb42

agree, it makes no difference, I would overpay the smaller one first to get rid of it first, but even then it isnt a big deal as the amounts are similar. Check out early redemption fees and if there are none it really wont matter.

DVardysShadow

Is either of them on a property you are renting out? Because there is tax relief on the interest on that mortgage.

Thrugelmir

Neither. Save the overpayments into an ISA whilst interest rates are higher on your savings than you are paying on the mortgage.

kimberleesmith

wow, very interesting thread, acnypne of you a practicing accountant?

sammyjammy

kimberleesmith wrote: »

wow, very interesting thread, acnypne of you a practicing accountant?

Why would they be? Its just the good old common sense advice that you get on MSE

Welcome.

skeeto

Rather than start a new thread about overpaying, I thought i would attach my query onto this one. I have a lifetime baserate tracker with the Northern Bank (N Ireland) which tracks at 0.37% above the banks base rate (therefore 0.87%).

My mortgage stands at £86K (with 20 years remaining) and I have been overpaying by about £150 per month for the past year. We have 2 young children and would like to move to a slightly larger house in the next 2 or 3 years as we are a bit pressed for storage room.

Should I just start to overpay like crazy for the next 2 or 3 years to reduce my LTV - I could probably overpay by about £250 per month- I am loath to give up such a good mortgage rate and I know that house prices are going to remain reasonably stable for the next few years. Or should I make the move now while new mortgage deals are still reasonably competitive? My wife would like to move sooner rather than later whereas I would like to try and overpay as much as possible whilst the rate is so low.

Many thanks

DVardysShadow

skeeto wrote: »

Rather than start a new thread about overpaying, I thought i would attach my query onto this one.

Start a new thread please. Your situation bears no great resemblance to the OP's.

edit restarted as https://forums.moneysavingexpert.com/discussion/4003357