Existing finite element implementations for the computation of free-boundary axisymmetric plasma equilibria approximate the unknown poloidal flux function by standard {lowest order} continuous finite elements with discontinuous gradients. The location of critical points of the poloidal flux, that are of paramount importance in tokamak engineering, is constrained to nodes of the mesh, which leads to undesired jumps in transient problems. Moreover, recent numerical results for the self-consistent coupling of equilibrium with resistive diffusion and transport suggest the necessity of higher regularity when approximating the flux map. In this work we propose a mortar element method that employs two overlapping meshes. One mesh with Cartesian quadrilaterals covers the vacuum domain and one mesh with triangles discretizes the region outside the vacuum domain. The two meshes overlap in a narrow region around the vacuum domain. This approach gives the flexibility to achieve easily and at low cost higher order regularity for the approximation of the flux function in the domain covered by the plasma, while preserving accurate meshing of the geometric details exterior to the vacuum. The continuity of the numerical solution in the region of overlap is weakly enforced by a mortar-like projection.