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Repayment Advice

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


  • tacpot12
    tacpot12 Posts: 8,094 Forumite
    First Anniversary Name Dropper First Post
    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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