overpaying on two mortgages - which one first?

richard plumb

Well-known Member
I have two mortgages - one main one for £150k, and a little £20k one when we did some work on the house. Both run in parallel and have 23 years left to run.

If I had the opportunity to overpay, does it make any difference which I pay off first? i.e should I overpay just on the small one to make it go away quickly, or the big one to reduce interest, or just both equally?

I'm not looking at huge overpayments, just maybe when I get a good bonus. Say £1-2k max per year (spread out to keep within the £500pm limits)
 

Goody

Active Member
Assuming that the terms and interest rates for both are the same, it shouldn't make any difference which one you pay off first but, if it was me, I would clear the smaller one first so I was only left with one.
 

tomson

Active Member
We're overpaying on our larger mortgage - the thinking was that that's the one which will incur the most interest over its duration. We've knocked about 4 or 5 years off the life of the loan so far.
 

Goody

Active Member
The thing you need to remember though is that if you pay £1,000 off one of the mortgages, again, assuming same interest rates and terms, you will have to pay interest on £1,000 less, whichever mortgage you pay it off so, on that basis, it doesn't make any difference which one you pay off.

It is just psycological; would you rather get rid of the small one first so you only have the one mortgage or would you like two smaller ones?
 
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