Dilemma! Which Mortgage Sub Account to Overpay?

themanfromportobello

Need to some advise please.

Note I do realise that this is difficult as we are trying to second guess where rates will be in the future but any thoughts would be appreciated!

I have two sub accounts on my NatWest mortgage.

- Sub1 is at 0.84% and runs out March 2024 and stands at circa £311k
- Sub2 is at 4.79% and runs out in 2025 (this was additional borrowing I had to take out recently.

Now when I need to remortgage Sub1 in March 2024, I will have several options.:

- Stay with NatWest and just remortgage Sub1, if Sub2 is still an lower than rates at the time
- Stay with NatWest and remortgage Sub1 and Sub2 (taking early repayment hit) if Sub2 is now expensive
- Move lender if rates better elsewhere and combine both Sub1 and Sub2 (again would have an early repayment charge) into a brand new mortgage

My dilemma is this:

I can afford to overpay at the moment (circa £220 per month), but which sub account should I overpay into?

The obvious choice is Sub2 as the interest rate is higher on this. BUT if rates continue to rise and in March 2024 they are more than 4.79% it would have been better to over pay Sub1.

The other option would be NOT to overpay either and pay into my Stocks & Shares ISA instead and make a decision in closer to March 2024 and use any growth (but again my ISA may actually fall or not grow as fast) accumulated from paying extra into it as a one of overpayment to either Sub1 or Sub2.

Thoughts and ideas appreciated. 

themanfromportobello

Sorry I should have added that Sub2 is £40k

Newbie_John

Save and wait for now. Then decide what to do when you remortgage, if savings account interest > mortgage - continue saving, if lower overpay what's higher.
£220 is not a lot in short period of time, so any gains you would make could affect your big decision next year. Hard to tell waht interest rates will be then as well, 8%? 3%?  

chanz4

highest interest