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Pay off interest only or repayment first?

Wooden_Spoon
Wooden_Spoon Posts: 26 Forumite
Eighth Anniversary Combo Breaker
in Mortgages & endowments
Hi,

I have an interest only at £30k and repayment mort at £78k - the interest is the same on both. If making an additional payment of £1k which should I choose it to come off? Repayment or interest only.

Thank you.

Comments

  • billybear1
    billybear1 Posts: 427 Forumite
    Part of the Furniture Combo Breaker
    If the interest is the same on both then it doesn't matter does it.
  • Lucy_Lastic
    Lucy_Lastic Posts: 735 Forumite
    Part of the Furniture
    I have been in a similar position and paid a lump sum off the interest only balance. My reasoning is that the interest only figure originally borrowed will never decrease unless you pay off a lump sum, whereas the repayment figure originally borrowed will gradually decrease as you make your normal repayments.

    Does that make any sense?!
  • TrickyDicky101
    TrickyDicky101 Posts: 3,534 Forumite
    Part of the Furniture 1,000 Posts
    billybear1 wrote: »
    If the interest is the same on both then it doesn't matter does it.
    ^ this. You still have the same balance left to repay whichever element you overpay against. If rates are the same then the interest you will be charged will be the same, whether it's on repayment or interest-only.
  • billybear1
    billybear1 Posts: 427 Forumite
    Part of the Furniture Combo Breaker
    Lucy_Lastic wrote: »
    Does that make any sense?!

    That actually does make more sense
This discussion has been closed.
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