What would you pay first? Mortage or Student Loans?
 

I have decided to take my money out of investments and pay off some debt...I am going to talk to my personal banker but just thought for the heck of it, I would ask what you guys think :D

Student loans or mortgage?

My student loans are ongoing...like five years now. I paid a large chunk in the beginning and have worked it down from $35 000 to $21 000 or so. I have to get the exact numbers from my investments but I think I could pay 2/3 of that off. Interest is...hmmm...so bad but I don't know. Something like 6 % or so?

My mortgage is new but my parents paid a huge downpayment on our condo. So its about $200 000 now. Would have been double if my parents didn't believe in spending money on their kids while they were still around instead of leaving it for us when they are gone :D Anyways, mortgage is so much more that I figure putting like $14 000 into it is kind of pointless...in the sense that I won't see much of a difference right away :D

I am kind of leaning towards my student loans so that I actually see them disappearing and I am not paying all that interest but we also plan to be mortgage free in 5 years for this place, so...a bigger payment now would help a bit. Hmmmm....

Also 100% of my fiances salary already goes to the mortgage every month.

What has the highest interest rate? That is the one you should pay down.

Tom R

IMO it would all come down to the interest rate. which one would save you more money by paying down??

How did you post before me?????? man quick fingers.

Yeah your right...I think its the student loans but like I said, I don't even know for sure what it is. I said 6% but actually I am pretty sure its higher. Its really bad that I don't know the interest rate :redface:

I think the student loans.

You guys are right.

I actually just want these stupid student loans GONE anyways. Seems like its been so long since I was in school yet I am still paying for it.

Man it would be nice to just use the $14 000 or so on Reef stuff :D But not a cent is going to this hobby...

i just did the same thing with my 22% visa

Yeah if I had credit card debt, that would be first to go!

I just got a credit card though not too long ago to get a credit rating before I could get my condo. So far I have just paid the balance at the end of each month.

te best way to gain a credit raating (according to my buddy who worked for ING) is to carry a small ballance and make your monthely min payments. carry a ballence of like 200 and you monthely payment will be like 35 bucks. as long as you are making this payment on time every time this will really help your rating. it shows you are capible of not only carrying a balance but also capible of making your payments without issues. just be aware of unwanted credit limit raises.

I would look at it this way. If you pay off most of the Student loans...you are closer to completely eliminating that payment. Once it is gone, you can then use that money to accelerate your mortgage payment or provide a buffer if times get rough.

Good point. Thats kind of how I am looking at it.

Funny you mention a buffer...my fiance just informed me that $5000 of this money is going into one of those new non taxed savings accounts for "rough times".

At 6% your student loan sounds like it is a "fixed rate" product rather than a variable rate product. I would be paying this down right away. All variable rate products (motgages/LOC) tied to prime will be low for quite some time (years). My variable rate mortgage is at 2.2% right now, and my LOC is 3%.

Yup, pay off the student loan first, since that has the higher interest rate. Once that's gone, you can focus your $$ on paying off the mortgage. That's what I did (eliminate all debts & now only have mortgage to pay off).

BTW, my parents have the same attitude about when an inheritance should be given which is why our mortgage & mortgage payments are so low.

Anthony

Sudent loan
 

Don't forget that student loan interests are tax deductible however I've also done the calculation and even with the tax savings, paying off student loan is more benefitial as your current student loan payment in the bank's eyes will give you a better leverage forthe buck. Also get your banker to look into RRSPs.

On a seperate note, for your new tank build you could try to claim it on your 2009 tax return and consider it as home Reno as that'll get you 13+% tax credit back up to $1300. Disclaimer: should talk to tax professional or CRA for further interpretation of 2009 budget.

Mortgages are more of an investment in yourself. It's like paying rent to yourself. If the payments aren't killing you, it's not a problem to leave it.

Student loans on the other hand do tend to be more stifling. I found my life improved hugely when I finally paid those off.

Now, if you were to ask about whether to invest in RRSP's or pay down your mortgage .. I have some interesting life stories I could share about that one day over a beer or other beverage of choice, about that particular choice. Actually it's probably quite a huge rant. So um .. since you didn't ask about that one, I'll leave it for another day (and a beer. Don't forget the beer.)

I do already have RRSPs. She had me do that right away when I joined the bank.

I am going to look into that Reno claim. Its funny because when they announced it, my fiance said right away I wonder if you can claim the new tank stand since its kind of a house reno. I might be bolting it to the wall in one spot too which I figure should be considered a reno...maybe not though :)

I won't ask until your out west one day and we can sit down for a nice cold beer but I have a feeling I know what kind of stuff you have to rant about.

When are you making your way out West? I hear you mention it once in a while...make sure you let us all know if you do :)

My parents just figure they can help more NOW than later and also they want to see us happy and not renting forever. So they paid downpayments on places for my brothers and I. They named a number and we had to come up with what we could afford ontop of that kind of thing.

Its interesting because they wouldn't do it though until we were done school and during school I was renting. My monthly payments were more than my mortgage payments now and I didn't have a great job since I was in school full time. They paid my tuition for school but I had to pay the rest...books, equipment, cost of living, ect. So I have full student loans basically. I remember at the time knowing they were going to spend money on me to get me a place but used to be upset that they wouldn't pay my schooling even though they could. Now I look back and I am very glad I had to do that part on my own.

Funny the things your parents try to teach you ;)

Pay off the student loans! Its a huge feeling of accomplishment when you did. While I didn't have student loans, I paid my own way through school, but for my last year I had to take out a Line of Credit. Paying that thing off at the end of that year was very euphoric.

Tony I totally want to hear your rant now! Once I have some reasonable beer, as in some that isn't labeled Lucky or Big Bear, and is not strictly a beer bong worthy drink, I'll definitely have you over.

If the govt finds out you had that kind of money and did not pay your student loans done. They will up your minimum payment without a seconds hesitation. It will not be in your benefit, mortgages are sort of expected to be paid long term...student loans are not....anymore. They have cracked down on them.

I'd pay off the student loan if it has the highest interest rate.

(your debt makes me glad I went to school in California, low tuition with federal and state grants, made it possible to come out debt free.)

If you can afford it pay your mortgage down weekly. This lets you pay it down faster and thus you save money overall.

food for thought
 

Just something to think about. I have no idea what your investments are but if you chose to leave them for a short while you could take advantage of two visa offers currently. Royal at 1.9 and scotia for 0.99 for an introductory 6 months. These ratesw are for balance transfers which essentially means that for .9 or 1.9% you can write yourself a cheque for whatever your limit is. As long as you pay it back before your 6 months period ends this is the lowest interest you will see. This is how I am going to help fund a house build while the builders mortgage kicks in.

Pay off the student loan, you don't want that thing hanging over your head forever. Mortgages are part of the 25 year plan anyways. Student loans aren't. :razz:

Who the heck goes willingly to The states....do your schooling in Europe...cheap and cultured :)

Thats where I am from...So thats where I went to school. I am a transplant in Canada, my wife didn't want to move...so I did.:biggrin:

see you were born there...thats hardly willingly :)

Pay off the higher interest rate loan off first. You will save in the long term.
We used to pay off the credit card, every bill, with the line of credit or overdraft. This saved us money, as the LOC was 1/2 over prime and the card was 18%
I don't quite understand what that new 5000$ savings account is for. All you get out of it is non taxable interest. Well, the interest rate for savings is really low now. You could see more savings if you pay 5000 towards a high interest loan. Like you are paying 6% on the loan, however you only receive about 2% on your savings, if that.

I did. Not sure what you mean by this...

My family is from the states and I decided to finish High School down there and also start college there. I finished most of my college up here though.

nothing really...