Additional mortgage payment help

Catglee

Sorry in advance if my question has an obvious answer.
Im in a place where I can allocate an additional 350 pm to my mortgage payments however I'm looking for advice on which mortgage, a B2L or my main home to put it towards??

Main home, 108k left on mortgage, 2.99% @ 18 yrs, 9 months left.. Currently paying 665 pm.
Worth 420k

Rental, 98k left on mortgage, 3.3% @ 13yrs, 9 months. Currently paying 790 pm
This property brings in 800 pm rent.
Worth 160k

I'm on top rate of tax, if that makes a difference.

My gut says pay the rental off first as the interest rate is higher however does the fact I get mortgage interest relief make this avenue foolish?

(also as an aside would any banks give me a top up on my 2.99 % mortgage to pay off the higher interest loan and would this even make sense)

EDIT. Rental is on a variable raye
House is on a fixed rate but I've checked and the additional, if applied would not attract any penalty.


Thank you

berocca2016

Catglee wrote: »

Sorry in advance if my question has an obvious answer.
Im in a place where I can allocate an additional 350 pm to my mortgage payments however I'm looking for advice on which mortgage, a B2L or my main home to put it towards??

Main home, 108k left on mortgage, 2.99% @ 18 yrs, 9 months left.. Currently paying 665 pm.
Worth 420k

Rental, 98k left on mortgage, 3.3% @ 13yrs, 9 months. Currently paying 790 pm
This property brings in 800 pm rent.
Worth 160k

I'm on top rate of tax, if that makes a difference.

My gut says pay the rental off first as the interest rate is higher however does the fact I get mortgage interest relief make this avenue foolish?

(also as an aside would any banks give me a top up on my 2.99 % mortgage to pay off the higher interest loan and would this even make sense)

Thank you

Both loans seem to be in the realm of fixed rather than variable rates, depending on the terms of your contract you may not be able to pay an extra 350 a month towards either. Lower rate on the family home is perhaps reflective of the loan to value ratio on it and might be impacted in an equity release scenario.

Catglee

berocca2016 wrote: »

Both loans seem to be in the realm of fixed rather than variable rates, depending on the terms of your contract you may not be able to pay an extra 350 a month towards either. Lower rate on the family home is perhaps reflective of the loan to value ratio on it and might be impacted in an equity release scenario.

Rental is a variable.
House is a fixed rate but I've checked and the additional, if applied would not attract any penalty.

Thanks

Q&A

With your BTL you would be entitled to mortgage interest relief at your marginal rate. From the start of 2019 the full interest is deductable. As a result you're probably better off paying down the mortgage on your primary dwelling first. Can revisit if BTL rate increases or if you incur a break fee.

Claw Hammer

Pay down whichever loan is costing you the greatest interest. Factor in tax deductions to decide which is the case.