Pay off small student loan before applying for mortgage?

moneyconfused1

Hi, I'm looking for a bit of advice about my student loan. After many years of paying my student loan I have a smallish amount remaining of around £4.5k. It's currently being paid off at around £200 per month so I hope to clear it in 2 years. My partner and I are hoping to buy a house this year and my question is, is it better to use some of our house deposit savings to pay it off now or just keep paying it? I know it will come up in the affordability checks, but do they account for the fact that it will be paid off in 2 years?
I hope that makes sense! 
Thanks. 

grumiofoundation

Are you limited by deposit or by mortgage affordability?


You might also consider posting on the mortgage board where brokers hang out and may be able to give you more accurate exact answers (although some venture elsewhere sometime!)
https://forums.moneysavingexpert.com/categories/mortgages-endowments

Philomel

I just bought a flat with a friend and we both have student loans remaining of approximately this amount. When applying for the mortgage we were asked for the loan amount and the amount that we were paying off every month, so I assume that the bank did take notice of the likely time remaining until these were paid off. It didn't present a problem and we still got the mortgage we wanted. My understanding is that student loans are cheap debt so generally it's not worth overpaying on them/paying them off early.

Irishpearce26

Philomel said:

I just bought a flat with a friend and we both have student loans remaining of approximately this amount. When applying for the mortgage we were asked for the loan amount and the amount that we were paying off every month, so I assume that the bank did take notice of the likely time remaining until these were paid off. It didn't present a problem and we still got the mortgage we wanted. My understanding is that student loans are cheap debt so generally it's not worth overpaying on them/paying them off early.

Student loans are certainly not cheap debt. Interest rate is higher than that of a high street bank.

Philomel

Maybe depends when you were a student? I'm on plan 1 where interest is 1.1%

grumiofoundation

Irishpearce26 said:

Philomel said:

I just bought a flat with a friend and we both have student loans remaining of approximately this amount. When applying for the mortgage we were asked for the loan amount and the amount that we were paying off every month, so I assume that the bank did take notice of the likely time remaining until these were paid off. It didn't present a problem and we still got the mortgage we wanted. My understanding is that student loans are cheap debt so generally it's not worth overpaying on them/paying them off early.

Student loans are certainly not cheap debt. Interest rate is higher than that of a high street bank.

Same as above (plan 1). Mine is cheaper than my mortgage interest.

Chances are the OP is not on Plan 2, which has higher interest (based on the many years comment in OP). 

Due to the future write-off comparing student loan with any other kind of debt is often quite misleading/flawed (With the exception of when you are guaranteed to pay it off like in this case!).

moneyconfused1

Thanks all. Yeah I'm on the plan 1 so it won't get written off for years yet I'm afraid, even though it feels like I've been paying it off forever! 
I'll post on the broker mortgage board as well. 

Irishpearce26

Philomel said:

Maybe depends when you were a student? I'm on plan 1 where interest is 1.1%

Just checked, I have two plans. One on plan 1 which is 1.75% and then postgrad loan which is a higher rate.