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Pay down Interest only or Capital
princessdon
Posts: 6,902 Forumite
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.
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.
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Comments
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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.0 -
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.0
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If you think there is any possibility of being made redundant. Then build an emergency fund rather than overpaying the mortgage.0
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