Large debt low interest v small debt high interest

Hi all, 

I have 2 mortgage debts
£139K with initial rate at 1.92% for 3 years and 
£33K on a variable rate so about 4.6% currently. 

I have some savings which I want to use to pay off one of the debts. I'm unsure whether it's more economical to use my saving and continue to overpay the lower debt now or focus on the large one as my payments will jump a lot when my initial rate expires. 

I've tried to calculate this using the mortgage calculators online but they don't factor in when the initial rate expires and a guesstimate of what my new rate in 3 years time could be. 

Would appreciate and advice or links to advanced mortgage calculators 

Many thanks 

Comments

  • South_coast
    South_coast Posts: 4,789
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    The larger mortgage is already costing you more (£7.31/day, as opposed to £4.16/day on the smaller one), so financially it would make better sense to OP that one and get the balance down as much as possible so you lessen your exposure when the deal ends
    Mortgage start: £65,495 (March 2016)
    Cleared 🧚‍♀️🧚‍♀️🧚‍♀️!!! In 5 years, 1 month and 29 days
    Total amount repaid: £72,307.03. £1.10 repaid for every £1.00 borrowed

    Finally earning interest instead of paying it!!!
  • savingholmes
    savingholmes Posts: 26,851
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    Personally I would pay off the highest interest - or in reality - put the £ into savings at 5% plus and earn a profit.
    Achieve FIRE/Mortgage Neutrality by mid 2030
    1) MFW Nov 21 £201,999 with 237 payments to go - now £184,341 Equity 26.26% (lower post move compensated by EF)
    2) Mortgage neutral by June 2030 AVC £7,613/£127,466 AVC target 5.97%
    3) FI Age 60 annual income target £12,500/30,000 41.66%
    Achievements: CC free since April 22. 1 year EF from Jan 24 & dedicated pot for home improvements
  • The larger mortgage is already costing you more (£7.31/day, as opposed to £4.16/day on the smaller one), so financially it would make better sense to OP that one and get the balance down as much as possible so you lessen your exposure when the deal ends
    Thanks for replying. I didn't realise it was already more expensive! How did you figure out the cost of each per day?
  • Personally I would pay off the highest interest - or in reality - put the £ into savings at 5% plus and earn a profit.
    Thanks for the response. Good idea about the saving option I'll look into that too 👍 
  • South_coast
    South_coast Posts: 4,789
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    cyphex85 said:
    Thanks for replying. I didn't realise it was already more expensive! How did you figure out the cost of each per day?
    £139,000 x 0.0192 (interest rate as a decimal) = £2668.80 annual interest ÷ 365 = £7.31 daily interest

    £33,000 x 0.046 = £1518 annual interest ÷ 365 = £4.16 daily interest 

    Your larger mortgage is the more expensive one until you get it down to about £80k, at which point it's £4.20/day in interest 
    Mortgage start: £65,495 (March 2016)
    Cleared 🧚‍♀️🧚‍♀️🧚‍♀️!!! In 5 years, 1 month and 29 days
    Total amount repaid: £72,307.03. £1.10 repaid for every £1.00 borrowed

    Finally earning interest instead of paying it!!!
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