Overpaying - and after fixed ends

Ourfamilyxx

Hi all,

I'm a mortgage free wannabe and looking for advice please.
We currently have 2 mortgages as we moved a few years ago and ported our first mortgage.

As of today our mortgage is:
69500 @ 2.99% until Sept 18
87800 @ 3.39% until Sept 19
We pay £740 a month for the mortgages based on 26 years remaining.

We are in an extremely fortunate position that we can afford to overpay £1000 per month (upto £1500 some months) plus were getting £20k in June 2018 from family.

So I want to overpay in the best possible way and I'm hoping fellow MSE's can advise.
* Do I plough all the money in the 3.39 as that's the higher interest rate?
*Do I plough it all in the lower figure at 2.99% as I'll be paying the SVR at 3.69% for a year until the end of the other fixed?
* At the end of the fixed 2.99%, instead of SVR, should I get a loan instead as that would be cheaper than SVR (assuming interests remain the same as they do now?)

Arghhh there's too many options in my head and I honestly don't know which is better.

Look forward to any help.
TIA

stardust09

I presume there isn't an overpayment limit each year if you're on a fixed rate mortage? E.g. Nationwide will only let me overpay by 10% of the original loan rate per year.

I can't answer your question but my instinct would to be overpay the one with the higher interest rate first, especially as it's £18,300 more than mortgage no.1 so that's even more interest on a sum at a higher rate than the lower mortgage.

I guess Martin would also say that if your mortgage is above the whatever-ratio-it-is-for-higher-interest-rates (60:40?), focus on getting that one to below the threshold for a cheaper remortgage next time.

I hope someone else can give a more sophisticated viewpoint than mine!

Toonsy

The higher interest one

Ourfamilyxx

Thank you for your replies.
I'll overpay the higher one then.

getmore4less

Watch out for ERC.

generaly you overpay the higher rate but there could be more optimal solutions

you need to know min borrowing amount for a retention deal.
rates on retention deals
max overpayment without any penalies.
penalties for larger payments and dates they change.
LTV.
ditch the fix numbers

There is the option to look at reducing the term on part of the loan
if that £20k is a certainty then that will reduce the risk of cashflow issues later.

with some more details can run some numbers.
lender would be usefull can look up retention deals.