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Repayment Advice

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Hi
I have a part repayment (85k) part interest only (160k) mortgage and am allowed to overpay 10% pa.
Interest rate on both is 1.27%
I may be able to afford to overpay - but which should I overpay and is it worth it?  What are the pro's and con's?
Any advice welcome
Thanks

Comments

  • tacpot12
    tacpot12 Posts: 8,094 Forumite
    First Anniversary Name Dropper First Post
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    Because the interest rate on both parts is the same, it should not matter which part you overpay, you will save the same amount of interest either way - this is assuming they are both over the same term. 

    However, if you have no plan in place to repay the £160K when the interest-only term ends (or your plan is not on-track), then I would recommend repaying the interest-only part, and keep doing when ever you can. The logic here is that the repayment part is 'safe' - providing you keep making the payments, your mortgage will be paid off. It is the interest-onlu portion that is 'risky' - if anything happens to your income or your plan as to how the capital will be paid off, you might find yourself homeless.  
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
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