Pay off Loan or keep on saving, saving saving

[Liverpool23]

Hello everyone,
I have an issue which on the surface seems very easy to solve and I just think I am being, perhaps too emotionally attached to think logically.
I have just over £38.5k in savings which is specifically for my mythical house of the future (I say that because I am in London and so sometimes can feel hopeless!)
I took out a £7k loan with my bank last year to pay for some expensive training for my job(s). This was quite frankly stupid, I wish I had just dipped into savings now but it is done now
I currently pay £221.16 per month to pay this loan off with 29 payments to go (so 29 months to go)
I can easily afford to make these payments out of my paycheque and still continue to save money for the house.
The interest is fixed so the loan will not grow at all.
In August I will have access to my savings once again (they have been in an account which I cannot access to gain the maximum interest)
My question is, come August should I pay this loan off in full (£5,900 remaining) OR continue to make the £221,16 payments per month until A. The loan is paid off or B. I am in a position to buy a house and then pay it off

The bank has said I will not be approved for a mortgage with this current loan still in place.

I earn approx £1,700 a month. I have a partner but we have no children and are not married yet so do not generally have shared finances.
Emotionally I hate being in debt but I have worked SO hard to get to this level of savings, that equally it sort of kills me to dip into savings to pay it off even though it may seem obvious to anyone reading this that that is the most logical thing to do!
I hope that is clear and thank you for all your responses

Pay the loan off

Pretty much always pay off debt first (unless your savings will earn more interest than the interest you are paying off on the loan).

Would your employer not fund at least some of the training?

Also when you come to applying for mortgages a recent loan on your history won't help.

Pay the loan off. Makes no sense not to.

If the interest payment in fixed then there is no benefit in paying off early unless you can negotiate an early repayment benefit with lender?

Pay off the loan OP. What is the interest on the loan and what is the interest you gain from the savings, that'll tell you all you need to know really.

Thank you for your responses so far.
INeedNewShoes My training was completely optional, I did it because it was a ''it looks good on my CV'' sort of thing instead of essential

Also, I thought that it would improve my credit rating, I did not realise that a recent loan in m history could actually be a negative thing, thank you!

If you pay the loan off it costs you £5900.

If you pay in installments it costs you £6413.

So you'll save £500 by paying it off in full. You're never going to make that in interest, so it's a no-brainer!

Pay off the loan! You can then save the extra £200 per month.

But she’ll have to pay the loan interest anyway if it’s fixed? So she’ll pay 5% interest and get 2% from savings or pay off loan and still pay 5% and get 0 from savings

Pay it off. When we got our mortgage we weren’t allowed any debt either apart from Car finance.

Pay off the loan to reduce the amount of interest you are paying. Then save another £220/month. Over the next 29 months, you will have saved more than you will have used to pay down the debt.

I will pay it off in full in August. Thank you all for being the voice of reason. I just want to be in the best possible position to get a flat/house in the near future and know that my finances will be over analysed the the extreme so want to do it right. I am of course 100% responsible for taking the loan out but were the bank wrong to say that it will look great on my credit rating to get the loan out in the first place? As Ineednewshoes says it could actually look bad? I have never had a credit card or anything so I was just trying to do the right thing.

I didn’t really understand from your OP, if you will save interest charges by paying off the loan early?

If you will then yes, pay it off in one.

If you don’t, then keep paying the regular monthly payments and put the rest of your spare cash in your savings acc.

On a separate note op - please share your saving tips! I’m also in London and on similar salary but not saving very much because of living costs - how did you get to nearly 40k!?

19Lottie82 hello; no I don't save any money by paying it off early, nor do I pay a fee for paying it off early(Can't believe some lenders actually charge to pay off a loan early!)
Cloudyapples unfortunately just pure blood, sweat and tears! I do my regular job and then I also have a ad/hoc job, like an emergency nanny role. So I've gone out in the middle of the night at short notice to look after older child when mum was having a baby or I have babysat 5 nights a week some periods (whilst having a 9to5 job) it is short term though and I think it is worth it. I have a tiny little room in zone 2 and walk 1 hour plus to get to my main job (admittedly this is to save twofold, no gym membership and very low transport costs)
So no short cut unfortunately just bloody hard work.

I think if you’ve never had credit the loans not a bad thing. A mortgage lender will want proof you can repay credit before they hand you several £100k to play with.

no I don't save any money by paying it off early, nor do I pay a fee for paying it off early(Can't believe some lenders actually charge to pay off a loan early^

You probably should save money by paying off the loan early if it's a normal bank loan. When the time comes, make sure you know how many payments you have left and what this adds up to, and look online or phone for a settlement figure.

The settlement figure should be less than the sum of number of payments left x monthly amount - the rules changed a few years ago that made it that they weren't allowed to charge the full term's amount of interest if loans were paid off early.

Regarding your credit rating, the loan probably didn't damage it and is probably an advantage in proving you can handle credit. You should really get a credit card and use it for a few small purchases each month and set up a direct debit to pay off the full amount every month.

That will help your credit file and there are also other advantages such as purchase protection (we got all the money back from our credit card when Monarch went bust last year, including the extra cost of expensive replacement flights at short notice) and much easier to hire cars abroad, so they don't take a big chunk out of your current account.

Also more secure for online purchases. On BBC Moneybox this week, they said you should never use your debit card for online purchases because if it gets hacked, they have most of the information they need to get into your bank account too.