Pay off Student Loan or overpay mortgage?

edited 30 November -1 at 1:00AM in Loans
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united4everunited4ever Forumite
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edited 30 November -1 at 1:00AM in Loans
I have about £3000 pounds and was wondering what is the best use of this. Should I pay off student loan, a bit of mortgage or something else? which will save me the most money?

Have a student loan with current balance of £2237 and making monthly repayments at the rate of RPI...currently paying £75 per month plus about £7 in interest.

Have a mortgage with a balance of £66 000 and paying 2.5% interest.

I also hope to move house in the next year or two. Mortgage companies do not seem to consider student loans too much when calculating how much they would lend. So I doubt paying off my student loan would make a difference to my mortgage elegibility/offer but if I pay off more of my mortgage I have an extra 3k equity which may help the house moving cause.

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  • R_P_WR_P_W Forumite
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    Have any cash savings?
  • united4everunited4ever Forumite
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    no, this 3k is my cash savings but its just sat in a current account earning no interest.
  • bigadajbigadaj Forumite
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    Move it to a current account which pays interest, nationwide, Santander, lloyds, tsb, hbos etc
  • R_P_WR_P_W Forumite
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    Yeah I'd hold on to it.....3 to 6 months expenses in cash is a good idea in case you lose job or have an unexpected expense.
  • CLAPTONCLAPTON Forumite
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    I have about £3000 pounds and was wondering what is the best use of this. Should I pay off student loan, a bit of mortgage or something else? which will save me the most money?

    Have a student loan with current balance of £2237 and making monthly repayments at the rate of RPI...currently paying £75 per month plus about £7 in interest.

    Have a mortgage with a balance of £66 000 and paying 2.5% interest.

    I also hope to move house in the next year or two. Mortgage companies do not seem to consider student loans too much when calculating how much they would lend. So I doubt paying off my student loan would make a difference to my mortgage elegibility/offer but if I pay off more of my mortgage I have an extra 3k equity which may help the house moving cause.

    what sort of student loan do you have?

    what do you mean you are paying 75 plus 7 interest pm?
  • united4everunited4ever Forumite
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    its from the student loans company (not been sold on to thesis or another company). Its an old student loan from 1998. I pay 75 a month and then the monthly interest of about 7 pound gets added on.
  • HerzlosHerzlos Forumite
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    I'd keep it accessible, preferably somewhere paying a bit of interest. Then you can add that to your deposit on new place, or use it for house moving expenses or anything else that comes up. Once you've put it onto your mortgage or student loan you're not going to be able to get it back.

    Both interest rates seem pretty low anyway.
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