Independent financial advice - saving to pay more off mortgage or HTB Equity Loan?

KJ1995

Hi all,

I completed on my flat in February 2023.

I paid £450,000. My deposit was £110,000 and my HTB Equity Loan I received was £180,000 - meaning my mortgage amount was £160,000.

My mortgage is 40 years with a 5.04% interest rate which isn't very good - fixed for 2 years and up for renewal circa November 2024.

I have been able to save approx. £1,000 per month since moving in, and my initial idea was to pay as much of my HTB Loan as possible after 5 years.

As mortgage rates are coming down, I hope to get a new 2 or 5 year fixed rate at the end of the year hopefully around the 3 / 3.5% mark if they continue to drop - fingers crossed - so my monthly repayments will be a lot lower meaning I can put more into my savings.

Question - do you think it would be wise for me to use my additional savings every month to pay as much of my mortgage off as I possibly can by the 5 year mark? My rationale for this is because the interest rate on my HTB Loan at Year 6 will still be significantly lower than my mortgage interest rate - so the more I have paid off the mortgage the better?

I may also come into some inheritance so I was thinking of maybe using this to pay off as much of the mortgage as I can by the 5 year mark? And then start paying my HTB Loan from the point of Year 6?

What are your thoughts? Many thanks in advance.