Help Do I overpay intrest only or Repayment??

icecurtain · 7 April 2008 at 4:50PM

Do I overpay Intrest only or Repayment

I have mortgage 15 year fixed with Northern Rock
it is spilt 73K Repayment and 105K Interest only
was I right in telling Northern rock to put the overpayment monies towards the Intrest Only part?

Mark @Confused.Mortgage

sammyjammy · 7 April 2008 at 5:41PM

It won't make any difference, if you reduce the amount you owe by making additional capital repayments then it will reduce the interest you pay. That is assuming the interest rate on both parts are the same.

icecurtain · 7 April 2008 at 5:43PM

Yes the rates are Identical they threw me a fast ball by asking which one but I thought that they had the same term so it does not matter!!!?

treliac · 7 April 2008 at 7:10PM

Won't it mean the difference between still owing the full capital loan amount on the interest only part at the end of the term if you choose to overpay on the repayment part. As opposed to reducing your final balance should you choose to overpay on the interest only part, therefore that being the best option?

money_maker_3 · 7 April 2008 at 8:20PM

What are you using to cover the interest only part? Is there a chance that it may not be enough to cover the £105 at the end of the term? If this is the case then def pay it off the interest only part, otherwise it doesn't matter