Best way to overpay these two mortgages - advice please!

beadlebunny

Hoping someone with a better brain for this can give some advice... I am in a fairly fortunate position and trying to work out the best way to do all of this... Hoping this is the right place for this.

Have mortgage 1, 160k on 2.48% fixed for 10 years from Nov 2022, ends Oct 2032. 25 yr term. Current balance 125k including regular and some initial overpayments, with around 20k of overpayments sitting in ISAs (around 10k locked and the rest available if needed). Monthly payment is 650 and also been putting 650 on top into the ISAs each month

Will soon be getting mortgage 2 for a full house reno, £200k on 4.71 fixed for 10 years - will end July 2035. 24/5 year term

On top of this I have an inheritance coming of £250k which i want to invest rather than use for renovations. Could potentially use some of the interest for overpaying mortgage(s).

Obviously want to overpay mort 2 as much as possible, limit for all overpayments each month will be around 1500.

What's the best way to do this please to limit interest paid & be fully paid off by end of 10 year fixes? 

Mark_d

If you invest money, how much of a return can you make?
Since you've been making overpayments on your 2.48% mortgage rather than investing this money, I think your expected net return is less than 2.48%.
Why would anyone want to earn 2.48% on invested money whilst paying 4.71% in mortgage interest?

kingstreet

Instead of doing the ten year fix on the whole mortgage amount, what about a split with an ERC-free tracker for the amount you think you'll want to repay soon?

beadlebunny

Hi - i initially made around 16k of overpayments on the 2.48 when interest rates were low, then when rates rose I started paying into an ISA instead - there's around 20k in ISAs which i was going to use to pay off the balance at the end of the 10 year term. One ISA is fixed at 5% for 5 years and the others are still earning 3.5 - 3.75% in access ISA accounts

If I overpay the 4.71 at 1k a month then I will pay around £50k in interest over 10 years, and if I invest the 250k I will likely make significantly more than that, even on a fairly low risk investment, plus will still have my capital at the end of it, plus a mortgage free home.

As far as I have been led to believe, I can only get a second mortgage with the same provider as the first and don't think that split is an option with the Halifax

Hoenir

beadlebunny said:

If I overpay the 4.71 at 1k a month then I will pay around £50k in interest over 10 years, and if I invest the 250k I will likely make significantly more than that, even on a fairly low risk investment,

What investments do you consider to be low risk with a 10 year horizon?