Part & Part - Overpayments

DropD

We have a £90k loan with two thirds on interest only and remainder on repayment. Our loan rate is 2% fixed for 5 years. Loan Term is 12 years.


We are in position to overpay by around £300 - £400 per month and wondering if should apply this to the repayment or interest only part?


Anyone any thoughts on best approach?


Thanks

Thrugelmir

Would suggest the interest only part. With only 12 years left on the mortgage term. You can target/monitor how much you've left to repay.

getmore4less

what's your goal.

if you target the repayment, if you get short of money your future payment could be lower



lets do some numbers(rates can change)


We have a £90k loan with two thirds on interest only and remainder on repayment. Our loan rate is 2% fixed for 5 years. Loan Term is 12 years

£90k 12years 2% is £704pm

current payments

£60k 2% 12y £469
£30k 2% 12y £50
total £519

you need £185pm extra to pay all of this off

£300-400 is plenty

if we say £300pm(£820total) for the next 5y starting now you will have £47,758 left and if you can get 2% for the next 7 year you need a payment of £610

if you can make £400pm(£920 total) for the 5y your payment for the next 7@ 2% goes down to £530.

DropD

Thanks for replies. The main aim is just to clear the mortgage by the end of the current agreement.


Hadn't considered how targeting the repayment could make things easier in future if money becomes short, thanks for taking time to explain.