Pay off Student Loan?

[ThankmelaterOkay]

Got £3800 left on my student loan (started with about £13k I think) graduating 2010. I’m paying £160/month at the moment on my current salary. It’s now 5% interest, I think this will rise to 5.25% soon (think it’s base +1%).

We are planning to buy (have been for years but due to jobs etc haven’t committed to an area long enough) soon, we are FTB. We have £225k as a deposit. Should I just use £3800 to pay off my student loan to avoid the interest? I might also be changing career soon which will mean dropping down to max £30k/year (currently £42k/year). So it’ll likely stretch the 2ish years left to pay. Or should I just continue paying off £160 until that changes?

Thanks.

Would the 3800 earn you more in a high interest savings account or would it cost you more in student loan interest?

Student loans also have very little impact on getting a mortgage so that's a bit moot.

Could lock away for 2 years at probably 5%. But I’m also a bit close to the £1000 cap. Probably wouldn’t want to lock it away for that long though, we could have that as a savings pot post potential
house buy I guess. It’s get approx £380 interest in two years.

I overpaid mine because I wanted the headspace. I am abroad though and paying every month was a real ball ache.

I paid mine off in November and it’s such a relief to not be deducted £200 a month on my wage x

Pay it off. You're unlikely to make that on a savings account and stocks and shares aren't doing much either.

Oh, I thought if you cleared it, your net income would increase and therefore you could borrow more. We’d probably be able to get a fairly decent rate, circa 4%.

I cleared mine as I wasn't consistently paying it off (just below threshold) but any OT and I'd get stung. I paid it because the interest was just growing, and I would rather have paid it then over a few years at x amount a month. My final balance was only about £1k though.

Probably worth paying it off just to be done with it and simplify things.

Yeah, I think I will. The only downside would be if interest rates collapse next year.

Thanks for the advise everyone.

I'm going against the grain here, but I wouldn't pay it off early. You could pay it off today and then tomorrow have a life changing critical accident (or worse) which means that you'll never need to work again (and therefore be liable to make repayments on the loan), but you won't get the money back if you've paid it off early and it'll be at a time when you'll probably be in most need of the money. Obviously this is somewhat morbid and perhaps quite unlikely, but something perhaps worth considering.

Haha, this is my kind of thinking!

Haven’t saved much for my pension as I assume we’ll all be dead by then!