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Thread: Over pay mortgage or save to pay HTB equity loan

  1. #1

    Over pay mortgage or save to pay HTB equity loan

    Hi I was wondering what's the best to do. About to buy a new build with HTB equity loan .
    127995 purchase price
    12800 deposit
    89000 mortgage
    26000 equity loan
    Approx figures

    We keep going round in circles whether to save the 26,000 over the next 5 years and pay the equity loan off first in full if possible

    Or just start over paying the mortgage straight away. We have a 5 year fixed rate mortgage of 2.56%.

    Been advised to over pay on the mortgage but I'm just not sure what's right?

  2. #2
    Unless you can get more than 2.56 percent after tax from a savings account I would overpay the mortgage every month.
    Even 5 percent regular savers like Nationwide offer only work out at 2.5 percent over the year.
    If you can afford to overpay by 400 a month for the next 5 years you will have paid down 24,000 plus interest saved.
    This will put you in a much better position when you come to remortgage in 5 years time.
    Well done on putting down a 10 percent deposit and if you can overpay you could reach 75 LTV

  3. #3
    Thanks for that we were going to put away 300 a month we will see if we can do 400. We're awaiting the final mortgage offer which should show us how much we can actually over pay by. We just want to be prepared and in the best possible situation once the 5 years interest free is up

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