Reduce a Mortgage or Clear a Second One?

Outsider_83

Hi -

My question is with various changes in circumstances I have two mortgages up for renewal:

Mortgage A - Private Residence -Renewal Date January 2018 - Amount outstanding £70 k @ 5%.

Mortgage B - Buy to Let - Renewal on January 2019 - Amount outstanding £35k @4.1%

Aside from my emergency fund I have £20k in savings averaging 2% interest, I would expect by January 2019 to have £35k in savings. My question is am I better off pumping the £20k into my private mortgage at the renewal date to bring it down to £50k or to hold back until January 2019 where I hope to have £35k and pay off mortgage B in full?

Any advice appreciated.

YHM

Say you were to fix Mortgage A now for it start Feb 2018, then I would expect the interest rate to be sub 2% (LTV dependant). If that were the case, it would then be counter productive to pay that off if you are yielding 2% in interest.

If I were you I would keep saving and pay off the BTL in full in Jan 2019. Does your current BTL allow overpayments? Why not exercise that until it finishes? This will also reduce the interest paid in the interim.

Outsider_83

The loan would be around 68% of the value of the house.


I am just fearful that with Brexit and interest rates likely to rise I could be looking at more than 5% on my personal mortgage come Feb 2018.

Thrugelmir

Little point in earning 2% interest when paying 5% on the residential mortgage.

getmore4less

Sort out your rates before deciding the next step far to early to decide where to target overpayment.

That 5% rate probably should have been changed already.

Outsider_83

The exit fees are too severe to justify changing it now, I will have to ride it out until the new year.