Mortgage - can I ask for some advice please?

[oliviafrombolivia]

Hello all. Anyone knowledgeable out there with some advice please. We have a part interest only, part repayment mortgage, taken out to give us a bit of breathing space in the first few years of the term. We are now paying the amount which would be the same as full repayment as calculated by the mortgage company. As we are six years into a 25 year term, and our fixed term as 5 years we are now in the very fortunate position to be paying a 1.75% over the BOE base rate for the life of the mortgage. I realise if the base rate goes up then our mortgage goes up.. The mortgage was done through a financial adviser, for one reason and another, I don't want to go back to them to ask this question. We are currently paying the 'extra' mortgage (to take the figure up to the repayment figure based on the 5 year term) as a separate direct debit. This goes into the pot for 'interest only' currently. Does it matter which I pay off first? the Interest only bit or the repayment bit? Or will it all work out the same in the end assuming we do this for the life of the term. Don't want to be making a costly mistake. The mortgage company won't obviously give advice.

Why won't your mortgage company give you advice? You're their customer. To bring down your mortgage quickly or reduce the interest payments you should make extra payments off the capital amount you still owe. I'd talk to your lender and see if you can't reorganise things a little.

thanks for your reply Cogito. I have just called them again. Different person actually told me what I needed to know, unlike last time. We are overpaying, and it doesn't matter which 'pot' it goes into. As long as we either overpay or meet the minimum repayment we will be at £0 by end of term, or before..

NOOOOOO - whatever you do DON'T put extra into the interest only pot - most mortgage companies simply see that as you paying future interest payments up front. Put it into the capital post and actually reduce the amount you owe each time you do this. The interest component will also go down as a result of there being less capital outstanding to pay interest on.

Agree with titchy. The extra money has to go towards paying off the capital for you to see any benefit.

I don't know about pots but you have to make quite clear that the over payment are for paying off the capital - I would say it needs to be the captial which at the moment isn't covered by the repayment schedule