Pay off mortgage or loans?

spriggsy

A bit of advice/ opinion required.

We currently have a mortgage with a Help to Buy loan part stuck on the side, so 20% is the HTB part and 75% was the mortgage. (the other 5% was the deposit)

We also have a couple of bank loans around the 4% mark being paid back over 5 years.

Now, I'd like to get the HTB loan paid back by the end of year 5 so that we don't have to pay any interest on it.

However, I'm aware of the rule that the minimum you can pay back on the HTB loan in one go is 10% of the market value of the house (so essentially, the minimum I can pay back in one instalment is half of the amount the government lent me). That's not doable at the moment as we don't have that sort of cash available.

So my thinking is to start chipping away at the mortgage and overpay month by month, with a view to then having a lower LTV by the time we remortgage, and borrow a bit more to pay off the HTB loan and simply have our mortgage. (We'd still be at the same level of debt, but the debt would be purely mortgage rather than a mix of mortgage and HTB loan)

My question is, would you advise using surplus cash to eat into the mortgage as mentioned above, or should I start to pay off my bank loans with the surplus and clear those?

I know it seems a bit of a unique situation in some respects and probably doesn't apply to many people, but interested to hear the thoughts of what others would do in the same situation.

Thanks

parsniphead

I would try to pay off my loans first but to be honest I have no knowledge of the help to buy scheme. I'm sure someone who understands it will be along soon.

Good luck with your journey.