I've had a search around and there is a similar question here and maybe here. However, I think this use-case is slightly different (not to mention those answers are US based), and also the answer to those questions were "yes" and "maybe" without any figures to back it up. So I'll post my question in the hope of someone who has more insight into the mortgage market (preferably in the UK) can answer using figures.
Let's say I have a student loan of £20,000 and my partner has one of £30,000. We are about to get a mortgage for a house worth £325,000. My partner has been offered to have their student loan paid off by their parents.
The interest on the student loan is 1.25% and the repayments per month for my partner will be around £200 per month on that £30,000.
My question is: Is it worth putting that £30,000 in a reasonably safe portfolio (and let's say hypothetically making 5% on it) or is it worth paying the student loan off? Of course if we weren't paying for a mortgage, then there would be no point paying it off as the student loan interest is far lower than what we would make through investment.
However, I'm wondering whether the negative affect on the mortgage, i.e. affecting the monthly payments such that the interest gained through keeping the money in an investment would be offset by having to pay the mortgage lender more in the long run. Is this a realistic worry?