Which mortgage to overpay

murphster

Hi,

After lots of ups and downs over the last few months, I am about to move house. I am letting out my current house. This is valued at 72,000, interest only mortgage (54,000) at 3.54% for 30 years costing £160, rent 468, tenant due to move in March. My new house purchase price is 155,000 with mortgage 139,500 at 3.14 %, also over 30 years and costing 597 per month.

I can live quite comfortable on my salary and want to keep all the BTL separate and have set up an account for all this. After paying the mortgage, insurance, keeping some back for tax and any emergencies I think I will have about 125-150 spare. I was planning to overpay the mortgage with this. Now I'm not so sure, from reading on here it looks like I might be better not overpaying the mortgage, mainly for tax reasons.

I want to be sensible with this money, so my question is should I overpay this mortgage or use the money to overpay my main / residential mortgage.

Thanks in advance for the help.

questionss

Mortgage interest is currently tax deductible on your BTL but soon won't be. I'd save it in a high interest account & overpay your BTL when the rules change.

murphster

questionss wrote: »

Mortgage interest is currently tax deductible on your BTL but soon won't be. I'd save it in a high interest account & overpay your BTL when the rules change.

Thanks, I'm not a high rate tax payer (although the income from the BTL added to my salary might just push me over) does this make a difference. I thought the new rules were to do with only claiming 20% even for high tax earners but wouldn't make much of a difference to basic rate payers.

Also when you say high rate savings account, what type do you mean, I'm struggling to find anything that pays more that 2%, even accounts were the money is locked in for years don't seem to pay much and they seem pointless if I'm going to take the money out when the rules change as I will loose the interest anyway.

Sorry if I sound stupid, I'm really good at not living beyond my means, not getting into debt and putting a little away for a rainy day but beyond that I'm a bit useless with money.