Best options to pay off mortgage

Hovis_70

Hi all, new here and looking at options to be mortgage free as soon as possible. Married, late 30s. 
We currently have 2 homes, 1 residential with 65k left @ 2.25% fixed 5 years. 1 rental on an interest only with 70k remaining (valuation 130k) yield is >10%.
Me and my partner have 20k each in cash ISAs returning 5.75%. We also have 30k invested making 10% return. We have 30k savings in a current acount (not making a lot). We currently pay £564 pcm mortgage repayments. We have c£300 spare cash a month to direct to closing the residential mortgage ASAP. So....do we simply overpay the £300 per month or put it in a high interest savings and pay an annual lump sum. 
Any help appreciated 

Hovis_70

Can't figure out how to ammendment the original post so apologies for the comment. Should also have added that, apart from mortgages, we are debt free. We aren't expecting any significant repair bills (such as cars) but need to leave at least 10k in easy access savings.

LadyWithAPlan

Maybe do a bit of both? Agree a lump sum to be paid into a  HR savings - are you taxed on your savings as that can make a difference to the calculations on savings vs OPs.
Then do OP - maybe round up to at least £600pcm and see where else you can 'find money to add to the OP 

Alternative is also add extra spare cash to pensions. It does not need to be all or nothing.  It could be 33/33/33 savings/house / sipp

Hovis_70

Thanks, re: tax. Yes, we'd be taxed on savings and I'm getting close to the next tax threshold. I best get some figures done.

Archerychick

Personally if the goal is to maximise interested saved/earnt then I would 

1. Move that £31k from a current account into a savings account so you earn interest from it 
2 if you have 5 years left on the mortgage whilst interest rates are higher I’d probably lock away some funds in a fix.
3. I would not over pay my mortgage, instead put that into savings, and at the end of the term make the lump payment. Unless savings interest rates reduce below your mortgage rate.
4. Are you able to make increased pension contributions (assuming you have one) to keep you below the HR band?

5. Make sure you’re maximising your isa allowances to minimise any tax you pay on interest 

South_coast

What's the interest rate on the interest-only mortgage, and what's the plan for repaying the capital? What's the long-term plan for the rental, is it intended to act as part of your retirement income?

Hovis_70

Thanks, both helpful answers. Looking like savings/paying off lump sum is my best option.
Re: rental. We've currently taken 30k of equity out which is in a investment making 10% return. In 3 year when this ends we'd invest in another BYL (assuming we can't get 10% return again). Long term we'd use the rental as income rather than aiming to pay off.

South_coast

Ahhh, that's the opposite of what I was thinking then! What about using the cash in the current account towards another deposit now then, rather than in 3 years' time?

Hovis_70

South_coast said:

Ahhh, that's the opposite of what I was thinking then! What about using the cash in the current account towards another deposit now then, rather than in 3 years' time?

We're fortunate the live in the grim North where poverty is still a realistic option for most people, that sort of money would get us a deposit on another rental. We are actively looking at that and need any savings account to be easy access should we find a suitible property. Also, with another property I'd be likely hitting the next tax bracket so we'd have to consider if becoming Ltd is worthwhile, our end goal is to invest on btl letting us derive an additional income, retire in our late 50s then progressively sell to release any capital gains. However, that's a other question!