Ask Martin Lewis: Should You Overpay Your Student Loan? | This Morning

good luck with that eleven, he's back to help you save more money, so it's Martin Lewis and he's here. What's on the show tonight, you're on TV, yes, but tonight is important. It's about family finances. It's the most important question I've ever had. Get is, where

should

I put the kids saving? So I'll answer that, but also the questions that people don't ask, things like life insurance, saving into a pension for

your

child, yeah, that's a real thing too, how do you reduce the cost of? child care the grandparent tax credit so it's a big holiday of all things financial that involve kids it's a must see if you have kids or you're a parent, guardian or grandparent we'll be on at eight o'clock sharp. watch tonight and I'll answer everyone's questions and my usual news you can use that too okay that sounds good thank you right we have some questions for you now and Evelyn got in touch and said I've completely forgotten about it. about filing my self-assessment tax returns for

this

year and I don't have time to get everything in order before today's deadline.

Will I be penalized for not having everything in order on time? Almost certainly yes, look, the deadline for self-assessment is today and The rule is quite simple. If they ask you to do a self-assessment, you have to do it. These are generally people who earn more or have more complicated tax issues, but the rule is that if they ask you to do it, you have to do it. Now, if you missed today's deadline, you'll usually be fined £100. Now, if you had a very good reason why you couldn't do it, for example if you had been in the hospital or

your

partner could have done it, you can contact them, they can discuss that reason, but if they have forgotten , then it's probably no more important than the £100 fine.

There are two different things that happen today: the hundred pound fine for not filing your tax return and also your in most cases. You are supposed to pay your taxes today, if you haven't then figure out roughly what you

should

pay and pay that because that would reduce the interest and if you can't pay it in time, the penalties later. If you didn't do it today, there will be another penalty in 30 days, so the real key is that if it's not going to happen today, make a payment of an estimated amount if you can. I spoke to a tax accountant just before about

this

exact topic, so I'm parroting. what they tell me make a payment if you can and the hundred pounds you will probably have to face that fine, but make sure you do your tax return in the next 29 days or that will be when the next fine comes. true, thanks, hope that helps Evelyn David said that my eldest son is leaving the UK to travel around Asia this summer, but he still has over £25,000 to pay on his

student

loan

.

He will travel for approximately 18 months to two years. has to continue paying the

loan

while he is abroad, well yes, I mean it is a myth that you don't pay

student

loans if you are abroad, technically the student loan is a contractual payment, so some people, yes You'll move abroad forever, you'll owe them money, but if you never return to the UK they're unlikely to prosecute you for it, which is, I think, where the myth comes from, but you've signed a contract to pay for it. Now it's worth remembering assuming your child went to university started university after 1998 the amount they have to pay is proportional to what they earn above a certain threshold now when you go abroad the threshold depends on the country in the one you are in, the cheaper the cost of living is in that country, so generally, a poorer country the lower the threshold, the more expensive the cost of living generally, a richer country, the more difficult the threshold , but the truth is that if your child goes abroad for a couple of years and does not work while they are there, then even if they are eligible to pay they will not earn more than the threshold if they are working, so they will probably have to pay and the threshold depends of the country, since you are going to be gone for more than three months, you should contact the student loan company and tell them, but just as you do in this country, you will have to pay a proportion of what you earn above a established threshold and what that threshold is will depend on the country in which you work.

Thank you, well done, yes, thank you. David, right. Chris says. I am 22 years old and have a relatively good salary. I'm trying to buy my first house with my girlfriend. We are both maximizing our monthly help to buy Isis and other ice creams. Should I continue saving to help buy? I put my help to buy money into Elisa and put more money into her. Did you follow that? Yes, I did, but today you bought into these some technical questions, so I'll do my best to try to make sense for everyone. The Help to Buy Lysa and the Help to Buy Isa and the Lifetime Isa are first-time buyer products where, when you save it, the state adds £25 on top, so in the Lifetime Isa you can save four thousand pounds per year and state. will add a thousand pounds on top as long as you use it to buy a qualifying property for the first time which, with a lifetime Isa, is a sub-£450,000 house that hasn't risen since it was launched in 2017, which I actually think is a mistake and I wrote to the Chancellor about it the other day asking if they would look at that issue now that help to buy ISO was its predecessor.

You can put Less on a help to buy Isa so he can see why you would want to go on the whole life Isa, there are a few problems, firstly you can only move up to four thousand through your help to buy Isa at a Lifetime Isa in this tax year, so if you have a lot more, you're going to have difficulty moving the money through. The second edition is that you must have an open Lifetime Isa for a year before you can receive First time buyer fine, so if you don't have one open and are planning to buy. next year it doesn't make sense.

The third problem with transferring money into a lifetime Isa is that if you don't use it to buy a qualifying home and want to withdraw your money, you will pay a penalty of 6.25 of what you put in. There is no penalty for withdrawing money to help buy an item, so a Help to Buy Isa is more flexible and much easier to use. Lifetime ice can put in more for a bigger bonus and you can also buy a bigger house with This is because the limit for the Help to Buy Isa is £250,000, except in London where it's the same as ISO 450,000 for life.

So whether you should move it to lifetime or not depends a little bit on whether you're buying quickly. No, if you're buying, you know you're thinking about buying three or four years from now, you might be able to transfer more money to life. Isis life, so it's probably worth it as long as you're definitely going to buy a qualifying home, but what? I really suggest you do there information online. I know there is information online that compares and contrasts the two and you should do a careful study of which is best for you at this time.

Okay thanks. Sarah says I have about 12,000 pounds. in Savings and I'm considering using that to take out a large portion of my student loan. There are 36,000 pounds left to pay. My hope is that it will prevent interest from accruing, but it would take away a portion that would really make a difference in the long run. run, you know what? Until this

morning

I had no idea because my type of girls have grown up now. Would you like there to actually be interest on a student loan? I mean, for those who said you know it was pretty tough, you would have to. pay in Scotland anyway, but first of all, it's tough, but the fact that it would accrue and it does, there's interest when, even if you don't do it, you don't earn enough to pay it, it still accrues, well, I kind of got the number, the problem with the interest thing is that interest is actually added to your account, which is not the same as saying people pay interest.

I mean, if you never earn above the threshold, you won't pay anything if you earn just a little bit above the threshold, you won't pay back what you borrowed in the first place, so it's the middle and high income earners who pay the interest. That's after you, middle and high runners, after college, you pay the interest, so the interest is terrible. We reported that student loans absolutely petrify people and the interest rate is up to inflation plus three percent, which of course is a lot right now, but for many people on lower incomes they should simply ignore the interest because they will never pay. it's because you won't pay off the loan in the 30 years before it's erased and that's the difficulty with this question as you add interest and lots of interest by the time you have to work out what interest you'll actually pay.

Or is that interest you won't pay now? What I don't have in this question is any indication of how much, if you have a higher income, you know if you've been in a high-income profession that you're going into. to see salary increases going up and up, then yes, paying off the loan will work if you have a relatively low income, know you're at or just above the threshold, and aren't likely to see a big salary increase. the next 30 years and you might take time off for, I don't know, motherhood or a career change or go work for a low-income charity, then no, don't pay it because that would be throwing money away because you wouldn't. you will do it.

It won't save you anything because you'll still pay, uh, only if you earn above the threshold for the full 30 years, so it's a tough equation. I would also say that I would always prioritize the more difficult financial challenges, such as saving for a mortgage deposit, if you ever needed a loan like to buy a car, you would have the money aside, you don't pay off your student loan and then have to ask again lent to those more while the interest rate is lower, where the terms are much worse. on mortgages and business loans than on student loans, so it's a complicated decision to make.

I wouldn't pay it at all unless you're sure you'll be close to paying off that loan within the next 30 years, otherwise if you pay it now and want that money back later. You can't do it if you voluntarily

overpay

, so it's hard to answer. It really depends on how much you are going to earn in the next 30. Thank you very much. See you at the Telly tonight, thanks.