Should I pay off my Student Loan?

Miss_FinancialHappiness

Hi,

Apologies if this is not posted in the correct forum. I currently have £8400 outstanding on my student loan at 1.5% Apr . I am very fortunate to be in a position where i could pay this off,without impacting on my emergency fund.

However, I would like to buy a house this year and that £8k would be a great addition to a deposit.

So am sort of stuck as I would love to be entirely debt free ( this is the only debt i have ) but also want to buy house.

Really just looking for any thoughts / best way forward?

Many thanks in advance !!

Miss Financial Happiness:)

immoral_angeluk

Will it make you feel better knowing it's gone?
Are you paying anything towards it at the mo?
Would you be able to save up for a deposit with the additional income not paying the loan might give you?

Go with your instincts. If you would feel better paying off your student loan, then go for it. Life is short, windfalls like 8k in your pocket don't come along often. Do what you feel is right.

[Deleted User]

Think of it from a mortgage application perspective:

Do the student loan payments count against how much you can borrow? Yes

Does the 8k count towards how much you can put down as a deposit? Yes

Will you have enough to put towards a deposit if you pay off the £8k?

A mortgage company will not consider student debt in the same way as any other loan. E.g. if you were made redundant, the student loans wouldn't send a bailiff your way!

glentoran99

ringo_24601 wrote: »

Think of it from a mortgage application perspective:

Do the student loan payments count against how much you can borrow? Yes

Does the 8k count towards how much you can put down as a deposit? Yes

Will you have enough to put towards a deposit if you pay off the £8k?

A mortgage company will not consider student debt in the same way as any other loan. E.g. if you were made redundant, the student loans wouldn't send a bailiff your way!

Student loan payments don't count against a mortgage,


The interest rate is less than borrowing the money on a mortgage so pay it as a deposit

elleJay42

Have a look around the MSE website, there's an article called something like 'should I pay off my student debt early' it's really useful and I'm sure will answer your question

Miss_FinancialHappiness

immoral_angeluk wrote: »

Will it make you feel better knowing it's gone?
Are you paying anything towards it at the mo?
Would you be able to save up for a deposit with the additional income not paying the loan might give you?

Go with your instincts. If you would feel better paying off your student loan, then go for it. Life is short, windfalls like 8k in your pocket don't come along often. Do what you feel is right.

I think its psychological with me knowing that I do not owe any money once it is paid off .

I am currently paying it off each month, so I guess the amount is falling every month .

The additional income would be great, it would feel like a payrise! so again i keep thinking about that

Miss_FinancialHappiness

glentoran99 wrote: »

Student loan payments don't count against a mortgage,


The interest rate is less than borrowing the money on a mortgage so pay it as a deposit

That's a good way of looking at it . I think I just need to focus on the bigger picture of buying a house and then after thats done focus on paying more towards it.

I think it really is psychological, just thinking it would be nice to know I do not owe anyone any money.

Lungboy

Be aware that the student loan interest rate is due to drop quite a bit the next time it's updated.

Rebecca01

I would go with the mortgage and see the student loan as sort of an extra tax.

Maybe flamed for this but I dont count mine as debt it just comes out of my pay every month just like NI snd income tax.

redux

While you are making up your mind, you can find higher interest rates on some savings accounts than 1.5%, though some are officially bank current accounts.

twiggy86

Rebecca01 wrote: »

Maybe flamed for this but I dont count mine as debt it just comes out of my pay every month just like NI snd income tax.

I don't count mine as a debt either. Personally I would 100% keep the money towards a deposit on a house.