Shall I pay off my personal loan or overpay my mortgage

Sam3007

hi there,
I have a person loan - remaining amount 15K at 4% for four years
My mortage expires in Jan 2024 and if I fixed for 5 years, the new fixed rate will be %5.8
Monthly payments will jump from £840 to around £1100.
I am now paying around £330 per month for the personal loan.
Towards the end of this year I might be able to use 10 to 15K but I was wondering weather it is beter to try to pay off the personal loan or overpay the mortgage ?
Any advise will be appreciated. 

Kennedy26

As your current mortgage rate/contract  isn't coming to an end till Jan 2024, if your current rate is lower than the 4% loan interest rate, it makes sense to pay off the loan first and you can then over-pay your mortgage with whatever disposable income you have afterwards. 

Sam3007

Kennedy26 said:

As your current mortgage rate/contract  isn't coming to an end till Jan 2024, if your current rate is lower than the 4% loan interest rate, it makes sense to pay off the loan first and you can then over-pay your mortgage with whatever disposable income you have afterwards. 

Thanks, but I will only have the extra money towrds the end of the year.
say in Jan 2024 my mortgage rate is 5.8% for 26 years (£11000 and my personal loan is %4.00 (£330) for four years. 
which one should I use the extra money for? 

Compo23

Would putting the money on your mortgage get you into a cheaper LTV band (usually 60/75/80/85/90)? If so, it would usually be worth doing that (as (for example) 5.6% on your entire new £xxxxx mortgage is much better than 5.8%).

Have a look at https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/

If you are already at a low LTV (under 60% generally, a few lenders will do 'better' deals for 50%) then it's normally a maths decision on which will save you the most money:
either paying a chunk towards your mortgage just before you re-fix, to ensure you have no ERCs charged - or paying the loan down.

If you paydown the mortgage you may (depending on the specifics as to how it's setup, check with lender(s)) be able to use future underpayments, which may be more beneficial/flexible to you if you feel you may need a cheap(ish) method of borrowing in future.

Also FYI a loophole for loan repayments used to be to pay *almost* all of the balance off. So pay off say £14,400 and let a payment or 2 go out of your account as normal. Believe that dodges the loan early repayment charge (I read about that a week after I paid my loan off last year!!!)