Mortgage early repayment advice

11
Posted 2nd Feb
Any mortgage expert on here? I have a mortgage which is made of 2 parts (For the same property). One on repayment and a second one which is part repayment part interest only. The first one cost me ~£590 per month, the second one ~£180 for the repayment part ( I have been doing some extra repayment on this) + £51.50 for the endowment part. On the first one i own currently approximately just under 50K, and the second one around 61K. The endowment is under-performing and will not meet the target at maturity. I may be getting some money which would be enough to pay one or the other. My idea was to pay the first one, be better off by £590 each month and pay some more towards the second part of the mortgage. Do you think i would be doing the right thing, or should i pay off the second one (repayment and interest only). My long term plan is to pay off whatever we are short when we sell the property anyway. Thanks
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How long have you got left on these mortgages?
Are there any penalties to pay if you repay the mortgage early?
If endowment is underperforming now, it may not be in say 15 years time?
Pay off the one which has the higher interest rate (if they're different).
Pay of the interest only one, as that will be ending when the endowment ends, plus if that’s paid off you know the other one is going down anyway with repayments..
Pay off the endowment one if there areno penalties, you know where you stand financially with a straight repayment.
Edited by: "snoopy18" 2nd Feb
it may be worth re-mortgaging with the money you get as then you will end up with one mortgage that may give a better rate. no harm in getting some free re-mortgaging quotes.

it would be best to pay off the second mortgage as that is part repayment and part interest so you are paying more interest on that one than the first one, which is a repayment mortgage. assuming that the interest rates on both mortgages are similar to one another.
Pay off the one with the highest interest rate
Clear the highest interest one and then use the surplus cash each month to put towards the other one
I'd pay off the endowment one as this is the mortgage that WILL cause you problems later (when it needs to be repaid). You can then use the money you were paying to help with the repayment one, which will reduce the term.
Thanks, yes i should have said, both on same interest, no penalty on either to pay early, around 7 years and 7 months left. I have already remortgaged to a better interest rate (Nationwide), i think i have got just over a year on that rate and then it goes back to standard rate but i will probably look for another deal with the same bank to avoid fees, survey etc
jeannot1802/02/2020 13:17

Thanks, yes i should have said, both on same interest, no penalty on …Thanks, yes i should have said, both on same interest, no penalty on either to pay early, around 7 years and 7 months left. I have already remortgaged to a better interest rate (Nationwide), i think i have got just over a year on that rate and then it goes back to standard rate but i will probably look for another deal with the same bank to avoid fees, survey etc



As they're both at the same rate, and neither have penalties, then personally I'd say to pay it off the loan that has the Interest Only element. I know you said you intend on repaying the IO element when you sell the property but this sometimes seems easier than it actually is, especially if you happen to be getting towards your lenders maximum loan age. If you have the capability to get rid of the IO mortgage part, then I think you'd be wise to do it. The rest which is on repayment will be paid off during the term anyways leaving you with no loose ends to tie up and doing it this way will probably save a lot of stress!
Psychobunni02/02/2020 13:57

As they're both at the same rate, and neither have penalties, then …As they're both at the same rate, and neither have penalties, then personally I'd say to pay it off the loan that has the Interest Only element. I know you said you intend on repaying the IO element when you sell the property but this sometimes seems easier than it actually is, especially if you happen to be getting towards your lenders maximum loan age. If you have the capability to get rid of the IO mortgage part, then I think you'd be wise to do it. The rest which is on repayment will be paid off during the term anyways leaving you with no loose ends to tie up and doing it this way will probably save a lot of stress!


Thanks, i was thinking to go the other way as i am looking at the monthly outcome, but yes maybe it make sense to get rid of this one first. I still should be able to overpay a bit on the other which will reduce the length. Thanks
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