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Repay Interest Only or Repayment Part of Mortgage?
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mcoppel
Posts: 3 Newbie
Hi, we have one mortgage account split into two parts, part is an interest only loan and part is a repayment loan. It is roughly 50:50 and both are on 1.99%.
I have a lump sum of around 20% of the total loan that I want to use to make an early repayment (the penalties are relatively low). So here is my question, do I put it towards the interest only or the repayment part of the mortgage?
Many thanks in advance! Mark
I have a lump sum of around 20% of the total loan that I want to use to make an early repayment (the penalties are relatively low). So here is my question, do I put it towards the interest only or the repayment part of the mortgage?
Many thanks in advance! Mark
0
Comments
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Economically, it makes no difference which part you pay off.
Please define 'relatively low' though - you could be better off placing the cash within an interest bearing account and paying over to the mortgage when the ERC is nil?0
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