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Pay more off mortgage or personal loan first

  • 10-05-2017 7:42pm
    #1
    jaffa20
    Registered Users, Registered Users 2 Posts: 4,565 ✭✭✭


    Hi all,

    I have a small mortgage at a variable rate of 3.5% variable and a personal loan with approx 8k left at 7.9% variable. I can afford to pay more of either at the moment but i am not sure which to pay towards first. The interest on the mortgage over the next 30 years is kind of crazy but then maybe it's best to clear the loan first and then start paying more off mortgage.

    Thanks for any advice.


Comments

  • #2
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,861 Mod ✭✭✭✭Henry Ford III


    Clear the most expensive form of credit first.


  • #3
    Nervous Wreck
    Closed Accounts Posts: 16,115 ✭✭✭✭Nervous Wreck


    Henry Ford III wrote: »
    Clear the most expensive form of credit first.

    The more expensive form is a bit relative though. The CC is at a higher rate so is more expensive but the mortgage, while at a lower rate, will be charged for longer on a larger amount, so will cost more over the term. Your advice is too vague to help the OP.

    OP, I would pay it off the CC. Realistically, you're not gonna make a huge dent in the mortgage interest, at least not relative to the dent you'd make in the CC. Others may disagree; take their points into consideration if they do; I'm not an expert, this is just what I would do.


  • #4
    jaffa20
    Registered Users, Registered Users 2 Posts: 4,565 ✭✭✭jaffa20


    Thank you both. i guess it makes more sense to pay off the shortest term debit and highest rate first.


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