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Which mortgage best to overpay on?
Devon_Sheepie
Posts: 7 Forumite
Hi All, looking for a bit of a steer here...
I have 3 mortgages with the Nationwide (all same property). This works quite well as I can overpay up to £500 on any or all of them every month should I want to (and of course if I ever have the funds to do so!
)
The Mortages are as follows:
1) £47,000 - fixed at 4.89% until Feb 2016 and completes Feb 2020
2) £41,000 - fixed at 4.89% until Feb 2016 and completes Feb 2020
3) £2,500 - fixed at 5.34% until Apr 2009 and completes Aug 2009
The question is:
which order of the Mortgages should I target first to overpay on?
One part of me says the higher APR one is best to overpay as more money logically going on interest.
Another part of me says go for the longer term mortgages to overpay as more interest is payed at the start of a Mortgage then at the end?
So... overpay higher APR mortage which is on shorter term? or lower APR longer-term Mortgage?
If anyone knows how to work this out, I would love to understand the mechanism to get to the right answer as well.
Cheers
DS
I have 3 mortgages with the Nationwide (all same property). This works quite well as I can overpay up to £500 on any or all of them every month should I want to (and of course if I ever have the funds to do so!
)The Mortages are as follows:
1) £47,000 - fixed at 4.89% until Feb 2016 and completes Feb 2020
2) £41,000 - fixed at 4.89% until Feb 2016 and completes Feb 2020
3) £2,500 - fixed at 5.34% until Apr 2009 and completes Aug 2009
The question is:
which order of the Mortgages should I target first to overpay on?
One part of me says the higher APR one is best to overpay as more money logically going on interest.
Another part of me says go for the longer term mortgages to overpay as more interest is payed at the start of a Mortgage then at the end?
So... overpay higher APR mortage which is on shorter term? or lower APR longer-term Mortgage?
If anyone knows how to work this out, I would love to understand the mechanism to get to the right answer as well.
Cheers
DS
0
Comments
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If you clear the mortgage before the fixed term expires, will you have to pay an early redemption charge? Im no expert but Id clear from the highest interest first, but be careful the ERC. Either of the 4.89s would be the same difference, they have the same term to run and rate.0
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it could be close on the small one, for sure - I have been targeting the bigger ones for partly that reason to avoid an ERC.If you clear the mortgage before the fixed term expires, will you have to pay an early redemption charge? Im no expert but Id clear from the highest interest first, but be careful the ERC. Either of the 4.89s would be the same difference, they have the same term to run and rate.
Thanks for reply.0 -
Alternatively, do you already max out your ISA allowance?? Id certainly save in an ISA with such a nice low mortgage rate rather than overpay
0
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