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Pay down Interest only or Capital

princessdon
princessdon Posts: 6,902 Forumite
in Mortgages & endowments
Evening all

I have a part and part mortage with the same rate. Does it matter what I pay down. I currently pay down the IO - but a friend at work said it was best to pay down the capital one as that means you pay less interest overall.

Comments

  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Makes no difference. Overpaying reduces the capital balance owed. Thereby reducing the interest charged.

    Personally I would opt for the interest only part as this keeps one focussed on paying the debt off.
  • princessdon
    princessdon Posts: 6,902 Forumite
    Many thanks - That was my initial thoughts and that is what I have been doing but she said that in case I was made redundant it is better to pay off the capital as I could ask for that value to be lowered (recalculated). I got very confused and do not do finances so will stick to the Interest Only loan.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    If you think there is any possibility of being made redundant. Then build an emergency fund rather than overpaying the mortgage.
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