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mortgage overpayments
timsmith
Posts: 13 Forumite
Hi everyone,
Im hoping for some advice!
We have two mortgages a main one and an additional we took out for some building work.
The main mortgage is significant but interest only at this stage, and the smaller mortgage is about a 1/6 of the size of the main mortgage but a tracker running out in Nov.
The interest rate for the main mortgage is current 2.5% (Base Mortgage Rate) and the interest rate for the additional is 4.49% until Nov when it reverts to SVR (currently 3.99%)
We want to make a modest overpayment of £200 per month and can do so on either mortgage. Apparently in either case it will come off the capital.
Im trying to figure out which mortgage is makes more sense to overpay? Understandably, the company wont comment on this!
I know that overpayments on the main mortgage will reduce interest immediately, (wont the actual direct debit wont be affected) so in effect we are accumulating a benefit, but Im not sure if its even possible to work out the most beneficial way?
Thanks
Tim
Im hoping for some advice!
We have two mortgages a main one and an additional we took out for some building work.
The main mortgage is significant but interest only at this stage, and the smaller mortgage is about a 1/6 of the size of the main mortgage but a tracker running out in Nov.
The interest rate for the main mortgage is current 2.5% (Base Mortgage Rate) and the interest rate for the additional is 4.49% until Nov when it reverts to SVR (currently 3.99%)
We want to make a modest overpayment of £200 per month and can do so on either mortgage. Apparently in either case it will come off the capital.
Im trying to figure out which mortgage is makes more sense to overpay? Understandably, the company wont comment on this!
I know that overpayments on the main mortgage will reduce interest immediately, (wont the actual direct debit wont be affected) so in effect we are accumulating a benefit, but Im not sure if its even possible to work out the most beneficial way?
Thanks
Tim
0
Comments
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The one with the highest interest rate, assuming you have a plan in place to repay the interest-only mortgage at the end of term?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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