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Over paying mortgage on rented flat advice

1 reply

aperfectday · 30/01/2013 21:21

Hi I was wondering if anyone could give me a little advice. I have a flat which has been rented for the last 2 years. The mortgage on the flat is about £96000 and we pay both capital and interest payments it has a very low interest rate at present. Not tied anymore and could over pay with no extra charges.

My back ground is that we moved across the country as having a baby so to be nearer to family. In a very lucky postion now where we can save every month. As interest rates for savers aren't good would it be worthwhile paying more from the mortgage?. Or as we pay tax on the income from the rent is it better to just be paying an interest only mortgage on the flat?. Sorry this isn't making much sense but I just can't get my head around it.

OP posts:
CogitoErgoSometimes · 30/01/2013 22:24

The net (taxable) income from the flat will be the same whether you're paying interest only or capital and interest. It is the interest that is the allowable expense. If you're paying more than 2%-3% interest on the mortgage therefore, it probably makes more sense to pay down the capital than to have too much in savings.

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