which house do i pay a lump sum off of?

[simonJ007]

i have two houses, one with an oustanding balance of 160k and the other with 290k. i have a lump sum of 20k. which house should i pay the lump sum off of?

[bednobs]

errrr i may be missing something here,but if you have an interest only mortgage, dosen't that mean you still have to pay the original value of the house on 18 years time? Ift hat is the case wouldn't it be better to keep the money for then (plus add to it of course)

[bushbaby_de]

Bednobs - if you make a capital repayment on an interest only mortage you are reducing the total amount you pay at the end, and hence less interest in the meantime, which is why I suggested it.

[Whoever]

Which mortgage has the highest interest rate? And will both mortgages allow you to make a one-off reduction without paying a penalty. It normally makes sense to reduce the debts which are charging the highest interest rate first. if they're both on a short term period, there's a possibility that the first mortgage you have to renegotiate will end up with a higher interest rate as inflation is starting to soar, which means mortgage interest rates will increase. In that case, reducing the bigger mortgage would make more sense as overall that will be the one which costs you more interest in the longer term.