Plan 2 Student Loan

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Somebody I know has a Plan 2 Student Loan. They are well into the 40% tax rate so I think that means they're paying interest of RPI + 3%. They also have a BTL which has no mortgage on it.

Surely it makes sense to mortgage the BTL and pay 3%-5% (plus get a 20% interest credit against their BTL income) and use the lump sum to pay off the Student Loan?

It seems way too simple so maybe I'm missing something?

[JoshSm]

It does look simple unless there's something really not obvious - borrow cheaper money to repay expensive loan penalty free?

Guess the issue could be taking out the mortgage when the loan is still outstanding.

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JoshSm said:

It does look simple unless there's something really not obvious - borrow cheaper money to repay expensive loan penalty free?

Guess the issue could be taking out the mortgage when the loan is still outstanding.

I agree - that's what I'm wondering as well.

They could probably borrow some money from BOMAD but then they wouldn't get any tax relief, and the parents would lose out on investment income.

I could suggest they pay their parents 7% but given how well the stock markets have been performing recently the parents would still be worse off