Continue overpaying mortgage monthly or overpay loan?

T

tom1ie

Registered User
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Hi all
I recently (March) completed my switcher to ub (that’s 4 switches now!) and got the fixed rate of 2.3%.
Every month since I have overpaid the mortgage by approx €1000.
We have recently taken out a 30k loan with our credit union, which has fixed monthly payments also.
My question is, is it better to payoff the credit union loan first and then continue overpaying the mortgage once the cu loan is gone? That way the monthly payment to service the cu loan can then be added to the mortgage overpayment aswell. Sort of like the Dave Ramsey debt snowball method?
Any advice is welcome. Thanks.
 
What interest rate are you paying on the credit union loan?

If it's higher than 2.3% then that's the loan to pay off first.
 
Pay off Credit Union as quick as possible. I can't see them giving you a loan for 2.3%, it's more like 12.3%.
 
Is it not more important the size of the loan and the term rather than just the rate? A 30k loan at say 5 years at 7% would have less interest than a 300k 30 year mortgage at 2.5%.
 
The cu loan is 9%. It’s fixed for the duration. So my plan of action is to stop overpayments to the mortgage and put that money off the cu loan. If I can put 1000 a month extra off the loan it’s finished in 30 months, minus the money I pay monthly off the principle anyway.
This will then free up the monthly cu payments to go towards an overpayment on my mortgage, once the cu loan is gone.
Am I right?
 
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Would you consider asking UB to lend you the 30k as a mortgage at 2.3%, then increase your monthly repayments on that part of the mortgage to align it with the term of the personal loan the CU offered?
So, pay less interest (2.3 instead of 9%) by increasing your mortgage payment for the 36/48/ whatever months the term of the CU loan is.
 
miser said:
Would you consider asking UB to lend you the 30k as a mortgage at 2.3%, then increase your monthly repayments on that part of the mortgage to align it with the term of the personal loan the CU offered?
So, pay less interest (2.3 instead of 9%) by increasing your mortgage payment for the 36/48/ whatever months the term of the CU loan is.
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At the time we switched, we were asked did we want a top up, as we had no plans to upgrade the house we said no. It probably would have been better to look for the 30k off the bank but I suppose I’ll be paying th cu loan a.s.a.p so I’m hoping I won’t lose out too much on the interest payments vs if we had of topped up the mortgage.
Plus there’s the mental thing of overpaying the mortgage and not wanting to then increase the amount of mortgage debt (even though I know I’m still taking out the same extra debt with the cu loan.)
 
Really?

I have a 20k Car Loan over 5 years at roughly 7% and 400 a month repayment. My mortgage is 450k on 30 years at 2.5%, overpaying my mortgage is making more sense to me given that it is roughly 800 a month in interest. Over the lifetime of the loans there is significantly higher interest paid out on the mortgage.
 
Andrew365 said:
Really?

I have a 20k Car Loan over 5 years at roughly 7% and 400 a month repayment. My mortgage is 450k on 30 years at 2.5%, overpaying my mortgage is making more sense to me given that it is roughly 800 a month in interest. Over the lifetime of the loans there is significantly higher interest paid out on the mortgage.
Click to expand...

If you pay off the car loan earlier you will free up payments you can put off the mortgage later.

If you have two loans at different interest rates (and there is no penalty for overpayment) then it is always better to pay off the loan with the higher interest rate.
 
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