Should I pay extra onto mortgage or loan?

[Ifihadamilliondollars]

I bought my property by borrowing 95% secured loan (mortgage) and 5% unsecured loan at same rate and terms. When I pay mortgage each month it pays those percentages to each automatically. I can make overpayments without penalty and either this overpayment is split as above or I can specify which part it pays off.

Property is worth more than when I bought it. not sure it is relevant!

I have currently got around £100 per monthtest side to overpay. I have no other outstanding loans or credit cards or debts thst need to be paid off. So, do I:

A. Split evenly each month
B. Pay off towards mortgage only and make a bigger dent in that
C. Pay off towards unsecured loan only and clear it much much more quickly and be done with it.

If there's no difference in the interest rate being charged, it doesn't really mak a lot of difference in terms of cost which you pay off first. However, if you pay down the mortgage and the property price is rising, you could get to a stage where you can remortgage your property & get a better rate because you are borrowing a lower percentage of the value. At that point you may be able to pay off the unsecured loan in one hit.

Cogito alas remortgage is not going to be poss for a while due to bad creditgonna take a few years to build it back up. So if I pay mortgage in is time, the n may well have a good chunk paid off so when able to re mortgage will work in our favour. I see that.

Thanks!

I don't think that would be the case. Defaults & late payments certainly bring the credit rating down but I don't think overpayments take it back up any quicker than meeting the loan payments on time.

The important thing OP is to make sure you genuinely have £100 spare and that, by committing to ovepayments, you don't have to run up credit elsewhere to meet day-to-day expenses

Do you think? I am not wholly concerned about my rating, ad my mortgage deal is ok. Not the best but ok and has benefits to it. And I will not ever get credit again in terms of loans or credit cards. If the money is not there now it is not bought. A remortgage is the only thing that would be considered with a better rating, and it wil take a while to change I am sure!

X-post. If you meet payments on time and in full and if you're not taking out any extra credit (v sensible) then your credit rating will gradually improve. It's just a question of time.

Cogito, it is flexible in terms of overpayment, I am not fixed to paying it. Some mo ths, like this month, it is possible. Next month, it might be £50 but it might also be £150. When I am £500 plus in credit, which I mostly am, I can withdraw it back out at any time should I need it. We worked to a very tight single income foe years due to Dh losing his job and struggling to get one. Now he has one, we have more money, and actually have credit at the end of each month for the first time, probably in my entire life! I am paying a small amount into savings for a holiday, ensuring all bills are up to date and some extra on mortgage. And I joined a health club.

We had cut out ALL our additional expenses apart from wine over the last few years, so now we can afford some, and I am too scared to spend it!

Sounds like you're totally on top of things and that flexible overpayment is a really good move. I know what you mean about being scared to spend it. :) Once you get into the habit of saving and budgeting, it's tough to splash out when you finally get out of the woods. Then again, a bit of caution will serve you well for the future.

That's why I want to over pay, so if something does happen we have a bit of wiggle room which we have never had before. Mortgage has never been missed but did a lot of robbing Peter to pay Paul in the past and don't ever wanna be there again. So, I will pay mortgage off first, for now, but mortgage man just said if I change my mind, I can ask them to change how it is spread, do in 6 months, if I think I want it on unsecured, I can get the whole 6 months changed. I think that!