Paying off interest only portion of mortgage?

jonboysez

Hi
Can anyone answer this question by showing the calculations? I had a sub prime mortgage of which £20,000 was interest only and the rest on repayment terms. I had a life insurance policy that came to an end and decided to use £20,000 of the proceeds to pay off the interest only portion of my mortgage - but would I have been better leaving the interest only portion and paying off £20,000 from the repayment portion of the mortgage, or does it make no difference? My mortgage is 1.75% above BOE base rate so turned out quite good after the initial high rate years ago - I had approx 15 years left on the mortgage when I paid off the £20k and the balance on the repayment part was approx £70k with int running at 2.25%. Would I have been better saving the £20k in some form of high interest but very safe bank account?

[Deleted User]

You'd have been best paying off whichever had the highest rate (assuming you couldn't beat either with savings).

pramsay13

If you've done it now does it really matter?
If you'd paid off £20k from the repayment portion you would still have the £20k that would need paid off at the end of the mortgage term.