# Mortgage overpayments



## jamest (Apr 8, 2008)

Only just got my first mortgage in November which is on a fixed rate of 4.89% but also have an additional borrowing at base mortgage rate on interest only, which is obviously a rather low rate at the moment so I haven't been paying that off and paying in £500 a month (the maximum I can without being penalised).

Should I carry on doing as I am? I take it the over payment is safe and as the interest rate is so ridiculously low I don't see the point of paying off the low rate borrowing when I can be lowering the higher rate borrowing.


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## The Detail Doctor (Feb 22, 2008)

Pay off as much as you can in my eyes.

We are overpaying to the tune of £250 a month & our mortguage will be 11years not 20.


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## Silver R26 (Jul 19, 2008)

The general rule is overpay if you cant make the money work harder else where. i.e. your mortgage interest rate is 5% and your savings interest rate is 3% nett then makes sense to pay of more on mortgage. But if it was the other way around then put money into savings.

Theres a good read here http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings


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## Crockers (Mar 30, 2008)

Are you saying you have two secured debts? One at a higher rate? If it was me I would overpay the debt costing the most.....reduce this debt if possible.


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## jamest (Apr 8, 2008)

Yeah I have the mortgage and an additional borrowing which is at base mortgage rate interest only, the mortgage is more money and a higher rate and the additional borrowing is less money and lower interest.

I have the money tied up in fixed rate bonds which will be used to pay off the additional borrowing but the way I saw it was that if I continued to do overpayments on the mortgage to reduce that then when interest rates finally went up high enough I would take out the over payments and completely pay off the additional borrowing. I felt in the long run this would save me more money, but I may be wrong.


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## HalfordsShopper (Jul 8, 2008)

jamest said:


> Yeah I have the mortgage and an additional borrowing which is at base mortgage rate interest only, the mortgage is more money and a higher rate and the additional borrowing is less money and lower interest.
> 
> I have the money tied up in fixed rate bonds which will be used to pay off the additional borrowing but the way I saw it was that if I continued to do overpayments on the mortgage to reduce that then when interest rates finally went up high enough I would take out the over payments and completely pay off the additional borrowing. I felt in the long run this would save me more money, but I may be wrong.


yeppers makes sense to me - and i'm an accountant.


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## adamf (Feb 5, 2006)

I am doing the same. Paying off £500 a month extra (which again is the most I can with getting penalised). 

I know one day I will talk myself for it. My ISA interest rate is rubbish so I might as well.


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