Mortgage payments

superM
superM Posts: 350 Forumite
First Anniversary First Post Combo Breaker
edited 12 April 2021 at 8:11PM in Mortgage-free wannabe
Hello,

I have 2 parts on my Natwest mortgage.

Part 1 2.29%. £101894 left
Part 2 3.97 £13859 left.  Taken out for an extension.

Penalty free allowance is 10%

I can pay £750 overpayment every month. On part 2 the max fee free I can pay is £1385.  After that it would be a 4% fee of any additional payments I make.

For part 1 fee free allowance is over 10k.

Which part I should pay the overpayment to part 1 or 2? Can anyomr suggest.

Part 2 has 4% fee and part 1 has no fee however it has a lowet intetest rate.

Thanks

Comments

  • pramsay13
    pramsay13 Posts: 1,937 Forumite
    Name Dropper First Anniversary First Post
    You should overpay part 2. 
    If you've paid the maximum then overpay part 1.
    It rarely makes sense to pay extra fees, simply put the rest into savings and when you are due to remortgage or change fixed rate pay it all in at that point.
    Part 2 is very high, are you sure you can't remortgage on a better rate?
    I don't understand your figures so can't help further.
  • powerspowers
    powerspowers Posts: 1,109 Forumite
    First Anniversary First Post Name Dropper
    edited 13 April 2021 at 8:17AM

    I’d  pay the max you can free off part 2. After that, If you overpay £750 it will cost you £30 each time which doesn’t seem worth it (you could check what interest it saves you to double check)

    How long is part 2 fixed until? You could save the money and pay it off in full when you need to remortgage - doable in about 18 months? 

    If your fix is longer, pay the max you can in your allowance, then split your £750 between the savings pot and part 1

    Hope that helps! 


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