Which mortgage to overpay: ported or the additional part?

BulliJudd4

Hi there,

I recently moved house and ported my existing mortgage (£180k, fixed at 2.59% for another few months). For the purchase I took out an additional £50k, currently on the tracker rate of 6.5ish%.

I'm now in a position to start making overpayments each month, and trying ascertain whether it's better to make them into the main/bigger mortgage with the smaller interest rate, or the smaller mortgage with the higher rate? Is it as simple as always choosing the higher interest rate one, or does that fact the total remaining amount on the main/bigger one is over three times as much come into it?

Thanks in advance, and apologies if a similar question has been posed here previously.

GrumpyDil

Assumuming you can get it to work pay it off the element attracting the highest interest rate 

Hoenir

Highest interest rate will be the most beneficial to overpay. Over time like rolling a snowball down hill you'll see the impact of compounding kick in. Speeding up the reduction of the capital balance owed. 

ElwoodBlues

Highest interest rate first, but as you've only got a few months left on 2.59% it may not make much difference, although should still be able to get another fix at lower rate than 6.5% What are you planning to do after that - how long are you locked in to the tracker for?

BulliJudd4

Thanks for the responses (which clarified what I had assumed!).

The fixed portion ends in June next year and the tracker is just rolling along at the moment with no set end date. Seemed the most sensible thing this summer when we purchased. Basically sitting with fingers crossed that six months from now there are some lower rates available!.