Large debt low interest v small debt high interest

cyphex85

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 

South_coast

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

savingholmes

Personally I would pay off the highest interest - or in reality - put the £ into savings at 5% plus and earn a profit.

cyphex85

South_coast said:

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?

cyphex85

savingholmes said:

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

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