Overpaying mortgage

[ForSale2024]

DH and I have two mortgage products from porting an existing mortgage and taking out a new mortgage to upsize. We will soon be in a position where we can start to overpay, not by much but about £150 a month (will hopefully be able to overpay more eventually as our salaries increase but that’s all we’ll be able to afford for now).

Just wondering if anyone has any insights as to split the overpayments equally for both mortgage products, or to load the overpayments on to one project.

We have 30 years left on both, and both are for a similar amount, but mortgage 2 has a much higher interest rate.

Mortgage 1: £135k, 4.4%, fixed until Jan 28

Mortgage 2: £136k, 2.0%, fixed until March 27

I’m thinking 1 because it has a higher interest rate, but 2 expires first so will likely go on to a similar rate as 1 at renewal

I assuming i could get a savings rate equal to product 1 I would save it separately and then overpay mortgage 2 just before fixed rate comes to an end, if rates had gone down by then and you got a rate lower than mortgage 1 you could overpay mortgage 1 instead.

I did the overpayment calculation and it’s the higher interest one first.

MSE has a calculator - £150 a month repays it 9 years 4 months earlier at 4.4% vs 8 years 11 months at 2%

Yes, pay the one with the higher interest rate first. Every little helps. There's not many savings products that will give you that rate atm so definitely overpay. Good luck OP.

Don’t you mean mortgage 1 has a much higher interest rate at 4.4%?
It makes sense to overpay on the one with the highest interest rate since that debt is costing you more.

We save our "overpayments" amount into a high interest account and then add it in each time we remortgage. Don't forget there is a maximum overpayment amount per year which is usually 10% if you go over that then you end up paying a penalty.

Depends on the provider. We are with First Direct who allow unlimited overpayments.

Pay fortnightly, too. https://www.loans.com.au/home-loans/first-home-buyer/does-paying-your-mortgage-fortnightly-save-money

Overpayments should always go to the highest rate product.

Thanks everyone! Will overpay on the higher rate product

There’s overpayment calculators online I think money saving expert has one and a lot of banks that the shows you the graph for long term projection of money saved on interest….i quite like a graph hahahah!

Make sure you get permission from the mortgage provider before starting the overpayments. I think in the US people were paying down their mortgage quicker than agreed and stopped payment when they thought they had paid everything off. The provider still wanted their interest payments and I have the nasty feeling they foreclosed on the properties because it wasn't paid. I don't entirely remember the details but it was a mess for the people involved and the message I took from it was get permission from the lender first.