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Early repayment advice
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The_Palmist
Posts: 789 Forumite
We have two mortgages and I think doing any early payments on the bigger mortgage will be better off in long run, any advice welcome.
Mortgage A: This is our residence, approx 140K left, 4%, remaining term 14 years
Mortgage B: Rented, approx 40K left, 4.5%, remaining term 9 years.
Mortgage A: This is our residence, approx 140K left, 4%, remaining term 14 years
Mortgage B: Rented, approx 40K left, 4.5%, remaining term 9 years.
Nothing is more damaging to the adventurous spirit within a man than a secure future. - Alex Supertramp
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Comments
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Strictly speaking you would normally pay off the one with the higher interest first. Granted there's little difference between them.
But if you cleared the rental property then everything you pay on that mortgage currently could be thrown at your residential one.
Thing to check is if there are restrictions on either about how much the overpayments can be overall or per year.I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe, Old Style Money Saving and Pensions boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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I am paying a lot more interest on the residential property and this is where I was thinking that overpaying here will be result in better interest savings.
I have only got a small budget to overpay each month and this will not breach the annual overpayment limit.Nothing is more damaging to the adventurous spirit within a man than a secure future. - Alex Supertramp0 -
How tax efficient is it to pay off the mortgage on the rented property quicker ? As a bigger profit will incur more income tax.0
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Not quite following the question, all of rent is classed as profit irrespective of mortgage size. I don't think paying off rental property quicker changes our tax position.Hoenir said:How tax efficient is it to pay off the mortgage on the rented property quicker ? As a bigger profit will incur more income tax.Nothing is more damaging to the adventurous spirit within a man than a secure future. - Alex Supertramp0 -
Well you assuming that the mortgage on the rental property was used to finance it, then you should be getting 20% tax relief on the mortgage interest part (irrespective of if you're a basic or higher rate tax payer).The_Palmist said:
Not quite following the question, all of rent is classed as profit irrespective of mortgage size. I don't think paying off rental property quicker changes our tax position.Hoenir said:How tax efficient is it to pay off the mortgage on the rented property quicker ? As a bigger profit will incur more income tax.
So the 4.5% is effectively 3.6% cost to you.0
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