Mortgage Overpayments

yosibest

Hi,

I have a question relating to my mortgage and I wonder if anyone would be kind enough to advise.

My mortgage is split into three sub accounts, I want to make overpayments, and I wonder if I should split my overpayments equally according to the % or to make overpayments to the sub account that represents the highest % of the outstanding balance.

All the accounts are set to the same interest rate 5.4%, the only thing that varies is the term and the % of the overall balance.

Account 3 - 13.93% 2 Years left

Account 2 - 26.91% 17 Years left

Account 1 - 59.17% 17 Years left

I would appreciate if someone a bit more illustrated than myself in mortgages could shed some light on what my best option is and if there are different opinions, what the rationale is for each of them. Thanks in advance.

Hoenir

What are the interest rates on the three accounts? 

noitsnotme

Hoenir said:

What are the interest rates on the three accounts? 

It’s in the OP (5.4%)!

Hoenir

Surprised that all the same.  All on a variable rate? 

Meanwhile I'd start with (a) and clear it quicker. 

jackieblack

Check with your lender
I have a main mortgage and took a further advance, it is a condition of the further advance that I can’t completely pay off the main mortgage until the further advance is fully repaid first

yosibest

Hoenir said:

What are the interest rates on the three accounts? 

They are all on very similar rates;

Account 3 - 13.93% 2 Years left (5.3%)

Account 2 - 26.91% 17 Years left (5.24%)

Account 1 - 59.17% 17 Years left (5.24%)

yosibest

Hoenir said:

Surprised that all the same.  All on a variable rate? 

Meanwhile I'd start with (a) and clear it quicker. 

Not exactly the same but very similar rates
Also, forgot to mention I have a 20% cap to the overpayments per annum before I start getting charged

yosibest

For some reason, I am of the impression that I should be better off, paying off from the larger balance first. But I am not basing my feeling on any science.