Overpayment help

kidbluenose8

Hi was wondering if anyone could tell me if I am better overpaying (monthly small amount)) on my interest only or repayment part of mortgage. Same rate on both. I was told interest only part saves me more but while speaking to nationwide who have for some reason moved all my overpayments from my interest only to my repayment part ( 3 years of overpayments) they say it makes no difference as I am paying same rate on both. Any advice would be very grateful. Thanks

hcb42

once you have paid the interest, you are repaying the capital....

kidbluenose8

Just to explain, my endowment has 8 years until it matures and is currently estimating a £12,000 shortfall on a £43,000 endowment so my overpayments were so that shortfall would be covered. My repayment mortgage part still has 15 years left. I know that if all my overpayments (3 years worth) come of my interest only part my monthly payment differs from what it would be if all overpayments had came off my repayment part. I just wondered if someone could tell me if financially it saves more money paying off interest only ( endowment) part or repayment part. Thanks

TrickyDicky101

In pure economic terms, as long as both the interest rates are the same then it makes no difference which part (interest-only or repayment) the overpayment is applied to.