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Which mortgage should I overpay please?

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
6 replies 879 views
muddywhitechickenmuddywhitechicken Forumite
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edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
Good evening. I need some advice please.

I have two mortgages and although I’ve been overpaying on Mortgage 2, I’m not sure that I’ve picked the right one...

Mortgage 1
Outstanding balance = £88,735
Interest only (2.5%)
Agreed redemption date = April 2028

Mortgage 2
Outstanding balance = £83,825
Repayment (2.5%)
Agreed redemption date = March 2027 (was April 2028 but we have overpaid £6,250 since November 2011 :j)

Or doesn't it matter?!

Thanks,
muddy
Mortgage at highest (April 2008): ~£195,000
Outstanding balance: <£29,500 :j
Current total overpayments: ~£128,750

Replies

  • pawlalapawlala Forumite
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    Not much in it really, biggest debt first so theoretically M1. But is M2 a higher repayment figure per month? If so you might find more mileage in cutting that one instead.
  • financialblissfinancialbliss Forumite
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    Mine?:rotfl:

    Can you get a savings account north of 3%, save into there and review as the interest rate changes?

    Reason why I ask that, is that I've also got a mortgage, which reverted to 2.5% in April 2011 and since then, I've been saving instead of overpaying on the mortgage.

    I've got ISAs and instant access savings at 3.2% and 3.1% which beats my 2.5% mortgage rate.

    Financial Bliss.
    Mortgage and debt free. Building up savings...
  • muddywhitechickenmuddywhitechicken Forumite
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    Mine?:rotfl:

    I set myself up for that one!!!

    Thanks financialbliss and pawlala

    I've got savings squirreled away in numerous places (except under the mattress :)) - ISAs, instant access, regular savings, fixed term e-bonds - ranging from 2 to 4.25% plus a sharesave scheme. I was thinking about opening a PO online saver account at 3.19% but I thought about it for too long and it's no longer available :doh:

    I'm most comfortable saving some and overpaying the mortgage with the rest but OH is not completely on board with overpaying. He thinks we should be having fun now rather than when we are in our 50s and mortgage-free... we both earn good salaries and have no children so we can do both in my opinion... and as long as I don't slash the grocery budget (he's a bit of a foodie) we will... without him having much of a say so :p
    Mortgage at highest (April 2008): ~£195,000
    Outstanding balance: <£29,500 :j
    Current total overpayments: ~£128,750
  • linseyglinseyg Forumite
    65 Posts
    as your on a low rate I would say save in a higher interest account. do you know the value of each property . If you are going to over pay the mortgage if one has a higher LTV (loan to value) maybe pay that one down first. If your rate goes up and you remortgage the lower your LTV the lower interest rate you will get
  • muddywhitechickenmuddywhitechicken Forumite
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    Thanks linseyg
    That makes sense but in this case both mortgages are on the same property (which is worth £250,000).
    Mortgage at highest (April 2008): ~£195,000
    Outstanding balance: <£29,500 :j
    Current total overpayments: ~£128,750
  • pavlovs_dogpavlovs_dog Forumite
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    does either mortgage have restrictions on how much you can Op each year? Something to bear in mind, no point paying charges when the money could be reducing the other debt instead
    know thyself
    Nid wy'n gofyn bywyd moethus...
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