Mortgage free in 3(ish) years.

Hi, got a question around part interest only part capital and interest mortgage (£50k +£[email protected] 2.5%) that i want to start overpaying with money i was paying to a further advance but have paid this off with endowments earmarked for interest only part as this was 3.75% with nationwide. I have half share in a rental worth approx 40k (approx 200/month rent,) so this could cover most if sold if required but want to use rent to overpay with as well. Question is would i be better off paying off the interest only part first on the cap and interest part or would it make no difference other than to reduce my exposure to the risk of now having no endowments to I/O part. Mortgage is due paid off 2034 but i want it gone, certainly I/O part by August 2020 using o/p, rent and employee share scheme.

Replies

  • Bump, do no one have any idea what is best in this situation?
  • LadyGnomeLadyGnome Forumite
    801 Posts
    Seventh Anniversary 500 Posts Name Dropper Combo Breaker
    Forumite
    I think you need calculate the options and see which works out best.
    So how much is IO and at what rate?
    How much is capital and at what rate?
    MortgageStart Nov 2012 £310,000
    Oct 2022 £143,277.74
    Reduction £166,722.26
    OriginalEnd Sept 2034 / Current official end Apr 2032 (but I have a cunning plan...)
    2022 MFW #78 £10200/£12000
    MFiT-6 #28 £21,772 /£75000
  • MabainalMabainal Forumite
    3 Posts
    50k Interest only 2.5%
    10k cap repayment 2.5%

    Due July 2034
  • LadyGnomeLadyGnome Forumite
    801 Posts
    Seventh Anniversary 500 Posts Name Dropper Combo Breaker
    Forumite
    I think it makes more sense to focus your OP on the IO part of the mortgage as the repayment mortgage is so small and will be reducing anyway.
    You have the potential to create a bit of a snowball effect with the IO as every capital repayment should reduce the interest. So if you don't reduce your payment when the interest drops then you get an extra capital repayment each month.
    MortgageStart Nov 2012 £310,000
    Oct 2022 £143,277.74
    Reduction £166,722.26
    OriginalEnd Sept 2034 / Current official end Apr 2032 (but I have a cunning plan...)
    2022 MFW #78 £10200/£12000
    MFiT-6 #28 £21,772 /£75000
This discussion has been closed.
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