Overpay mortgage or personal loan?

RaffersRaffers Forumite
131 Posts
Part of the Furniture Combo Breaker
This is a fairly quick question as I suppose I'm looking for a binary answer. I have £70K repayment mortgage @ 0.75% variable (i.e. English base rate) with freedom to make unlimited overpayments through my employer. I also have circa £4.5K left on a personal loan for a car @ 11. 9% (when I applied for the loan, I was earning less). This loan was taken over 3 years and will ordinarily be repaid by June 2021. The mortgage as it stands has 15 yr 11 months to go at the normal payment level.

I can comfortably manage paying for both. I'm also in the situation where I could realistically make monthly overpayments to either (or both???).

I'm just wondering whether there's anything obvious I've overlooked when considering which of the two to overpay. I can, for example, give an extra £200 p/m to my mortgage and seemingly shave roughly 5 years off the repayment term. That sounds good.

However, I do like the idea of paying off the personal loan quicker due to the APR.

Any thoughts are most welcome.


  • ian1246ian1246 Forumite
    191 Posts
    Fourth Anniversary 100 Posts
    Pay off the one with the highest interest - saving you more £££. Once the personal loan is overpaid, you can then take the monthly £££ payment which would have been your personal loan payments & also chuck them at the mortgage overpayment if you wish?
  • kaycastlekaycastle Forumite
    337 Posts
    Fifth Anniversary 100 Posts Name Dropper Photogenic
    I would pay off the loan :) Could be worth doing a spreadsheet of them both to see the impact so that it will be clear where the biggest savings are.

    Do you have a budget in a spreadsheet? Could be worth a look at everything and seeing if you can manage any more overpayments - you could even try to do both :D

    I also think once you do pay off that personal loan - start a savings pot if you know you might have big spends again so you don't have to take out high interest loans for them.

    Good luck with achieving your goals!
    Mortgage: Oct'17:£228k Current: £176k.Short-term: Loft conversion target: £35k/£45k. Emergency fund: £400/£2500Long-term Goal: Mortgage neutral by 2031 (age 40) Pension: £26k30 Something dreaming of not paying a mortgage
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