Sub Account Overpayment Question

Skivsey1

Hoping you can help me with a quick question that is probably super easy for you guys!
 Have a repayment mortgage with Co-op can overpay by 10% per year
I have 2 subaccounts from previous houses etc for the same house 
1Fixed Until Feb 2023 2.14% Balance is £16k
2 Fixed Until May 2024 2.24% Balance is £82k
So should I  (a) overpay the whole 10% next year and apply in proportion  evenly across both accounts ie 1&2 or (b) wait and save to try and totally clear subaccount 2 when the fixed term runs out.
As number 2 is far higher and at a higher rate of interest I suspect the better option is (a) but am not sure if I like the psychological benefit of totally clearing the smaller amount.

It isn't the most exciting question but I like to have a goal!

getmore4less

Higher rate is usually the better option but there may be options depending what the policy is on recalculation of payment after a large overpayment. 

The difference in interest saved on a £9k overpayment is £9 for the year so not much in it.

There are other factors like LTV and keeping the first to get a lower rate when that deal runs out.

need full details to do a number crunch from now till 2024  

Skivsey1

Thanks for your reply!
So after a large overpayment they reduce the monthly  repayments which is a pain and we can't take it off the term which is also annoying - both thing we will consider when we next fix.
The mortgage outstanding is only around 17% of the value so that is good

Thrugelmir

Skivsey1 said:

So after a large overpayment they reduce the monthly  repayments which is a pain 

That's to stop you incurring early repayment charges. Reducing the balance, reduces monthly interest, which results in a higher capital repayment every month. 

getmore4less

Skivsey1 said:

Thanks for your reply!
So after a large overpayment they reduce the monthly  repayments which is a pain and we can't take it off the term which is also annoying - both thing we will consider when we next fix.
The mortgage outstanding is only around 17% of the value so that is good

Reducing the payment makes a tiny difference(a lot less than many think) it is the overpaying that does the job.
Just save the difference an overpay next time there is a ERC free option.

Are you hitting overpayment limits?
How much would you like to overpay

If you have such a good LTV why are your rates so high?
What is  the full term and current payments.
next ERC free date and the ERC now if it drops when

Skivsey1

Thanks again and sorry for the delayed response.
I will save the difference and then when next Jan comes along hopefully we will have another 10%  to pay off.
We fixed for 5 years and those rates were pretty good at that time.