Save or Pay off student loan (pre 2012)

ziggycj

I graduated 2012 (plan 1) and currently have £17,000 student loan debt. I have almost £50,000 in savings. I was saving for a house but this had to be put on hold, probably until September 2018.

The loan interest is currently 1.5%. I have a range of bank accounts (3-4% interest) but still have around £30k that is left over.

Is it best to just pay off the £17,000? What accessible (not fixed) ways are there to save £30k at a higher rate than 1.5%?

silvercar

Is it best to just pay off the £17,000?

If you pay it off you will never ever get it back.

Won't you need it for your deposit in 2018? Consider also that the £17000 will lower the LTV of the mortgage you will need and that may mean a lower rate on your mortgage.

To work out how much the student loan is going to cost you long term, we need to know how high the repayments are and when you expect to have it cleared.

ziggycj

silvercar wrote: »

If you pay it off you will never ever get it back.

Won't you need it for your deposit in 2018? Consider also that the £17000 will lower the LTV of the mortgage you will need and that may mean a lower rate on your mortgage.

To work out how much the student loan is going to cost you long term, we need to know how high the repayments are and when you expect to have it cleared.

Thanks. I'm very likely to pay it off in full before the 25 years. I've always been one of the 'never pay off early' people as it's a third of my mortgage. The thing that got me questioning is that my sister (who I'm supposed to be buying with and is barely contributing anything to the deposit) is now paying of her student loan instead of saving for the deposit since they increase the interest rate to 1.5%.

However, I still think even with the rise - Never pay off early, unless you have nothing to pay off/save for. I just don't think I can get the reasoning behind this through to my sister so wanted to look deeper into it in case she did have a good point. But no she's wrong, I'm right :money:.

My annual interest works out around £190 so all I need to aim for is around that through my savings interest. I could get that in savings interest and plus pay off the loan but for mortgages, it's the higher deposit that matters.

Lizabeth21

Maybe reconsider buying with your sister as her priorities are different financially to you. Also even families have falling outs.....

ziggycj

Lizabeth21 wrote: »

Maybe reconsider buying with your sister as her priorities are different financially to you. Also even families have falling outs.....

If only... she's such a liability.

But this is actually a good investment op for me (I'll be renting out the spare rooms) so I don't mind. She does pay bills etc no problems and has never had debts or anything, it's just the 'saving smarts' she's lacking.

Lokolo

I paid my student loan off after 6 years after my job salary was increased a lot and I had already purchased a property.

My feelings are - wait until you have <2 years to pay off. Then overpay to get rid of it then. Until then, just pay the minimum.