Should you overpay your mortgage or student loan? Compare interest savings, write-off impact, and find your optimal debt repayment strategy.
• Student loan will be written off - overpaying wastes money
• You'll have £314,507 cancelled at write-off
• Mortgage interest is real cost that must be paid
• Mortgage overpayment saves £18,482 guaranteed
For most graduates, mortgage overpayments save real money while student loan overpayments often just pay off debt that would be cancelled anyway.
Current annual mandatory payments
Overpay £10,000 towards mortgage
Mortgage Interest Saved:
£18,482
Mortgage Time Saved:
2.1 years
Optimal for most graduates
Overpay £10,000 towards student loan
Mortgage Interest Saved:
£0
Mortgage Time Saved:
0.0 years
SL Interest Saved:
£139,745 (wasted)
Write-off Status:
£164,763 cancelled
Wasteful - loan will be written off
Overpay £5,000 to each debt
Mortgage Interest Saved:
£9,616
Mortgage Time Saved:
1.0 years
SL Interest Saved:
£69,872 (wasted)
Write-off Status:
£239,635 cancelled
Suboptimal - worse than mortgage-only
Guaranteed, Tax-Free Return
Mortgage interest savings are guaranteed at your mortgage rate (5%). No tax implications and no risk.
Mortgage is Real Debt
You must repay every penny of your mortgage plus interest. Student loans write off after 40 years with any remaining balance cancelled.
Student Loan Interest Often Irrelevant
If your loan will be written off, you're not actually paying the interest—it just accumulates on a balance that gets cancelled.
Compound Benefits
Overpaying £10,000 now saves £18,482 over the life of your mortgage and pays it off 2.1 years earlier.
⚠️ Student Loan Will Be Written Off
Your loan balance will be £164,763 at write-off. Overpaying reduces this but doesn't save you real money—the cancelled amount is free money you're throwing away.
Rather than permanently overpaying either debt, an offset mortgage gives you 90% of the benefit while maintaining full liquidity:
Offset Benefits
Traditional Overpayment
Offset mortgages provide flexibility while delivering most of the financial benefit of overpayments.
Scenario: Graduate with £180k mortgage at 5% (20 years left) and £45k student loan
Option A: Overpay Mortgage
Option B: Overpay Student Loan
Overpaying mortgage is £42,000 better strategy than overpaying student loan.
Understanding the mathematics behind debt repayment helps you maximize your financial benefit and avoid costly mistakes like overpaying student loans heading for write-off.
Discover additional tools and guides to help you navigate property ownership with student loans