Student Loan Repayment Calculator — And Its Real Mortgage Impact

You repay 9% of everything you earn above your plan's threshold (6% for Postgraduate loans), deducted automatically through PAYE alongside income tax and National Insurance. The threshold isn't a cliff edge — you only repay a percentage of the income that exceeds the threshold, not your entire salary.

Running your own figures through a genuine student loan repayment calculator matters because the deduction is easy to underestimate from memory, particularly once a pay rise pushes more of your salary above the threshold. A £2,000 pay rise doesn't simply add £2,000 to your take-home pay — a meaningful slice of it goes toward student loan repayment on top of the additional income tax and National Insurance, which is worth understanding clearly before budgeting around an expected raise.

Most student loan calculators stop at the monthly deduction figure and go no further. That's a genuine gap, because for anyone planning to buy a home in the next few years, the deduction's real significance is what it does to mortgage affordability, not just take-home pay. A student loan repayment reduces the income a lender considers available to service a mortgage, which can meaningfully shrink the maximum amount offered.

This is precisely why a genuine student loan repayment calculator is more useful when it connects the monthly deduction to its likely effect on borrowing power, rather than presenting the repayment figure in isolation. Someone planning a house purchase benefits far more from seeing "this reduces your borrowing by roughly £X" than from a deduction figure alone, since the deduction figure by itself doesn't answer the question most graduates approaching a mortgage application actually want answered.

Which plan applies to you depends on when and where you studied. Plan 2 covers most England and Wales starters from September 2012 to July 2023. Plan 5 applies to students starting in England from August 2023 onward, with a considerably longer 40-year write-off window — meaning fewer Plan 5 borrowers are expected to repay the full amount before it's written off.

If you're genuinely unsure which plan you're on, checking your online account at gov.uk/student-finance directly is the reliable route, rather than assuming based on graduation year alone, since regional differences (England, Wales, Scotland, Northern Ireland) and specific start dates can place otherwise similar graduates on different plans with meaningfully different terms.

A student loan repayment of around £155 a month can reduce your maximum mortgage borrowing by roughly £22,000 to £27,000, depending on the specific lender's affordability model and stress test rate. Different lenders treat the deduction differently — some model affordability on take-home pay after the deduction, others add it back and assess differently — so the exact impact genuinely varies by lender.

This matters most for graduates approaching a first mortgage application without having previously connected these two numbers. A £38,000 salary might look like it comfortably supports a particular mortgage size using a simple income multiple, but once student loan, income tax, National Insurance, and any other regular commitments are stripped out, the genuinely affordable figure can come in meaningfully lower than the simple multiple suggests. Speaking to a mortgage broker who can run a proper affordability assessment against your specific circumstances, rather than relying on a rough income multiple alone, is genuinely worthwhile once a purchase becomes a realistic near-term plan.

For most borrowers, no. Loans are written off after 25 to 40 years depending on the plan, and many borrowers, particularly on Plan 2 or Plan 5, never repay the full balance before it's wiped. Overpaying a loan that would eventually be written off anyway means the extra money could often achieve more elsewhere — pension contributions with genuine tax relief, for instance. Overpaying only makes clear sense for high earners who would otherwise clear the full balance well before the write-off date regardless.

Working out which category you fall into requires a genuine projection of your future income against your current balance and interest rate, not just a gut feeling. A graduate on a modest starting salary with a large Plan 2 balance is statistically unlikely to clear it within 30 years, making overpayment a genuinely poor use of spare cash. A high-earning graduate on Plan 1, with a smaller original balance and a shorter 25-year write-off window, is in a meaningfully different position, and overpaying could genuinely save real money in that specific case.

If you have both an undergraduate and a Postgraduate loan, you repay both simultaneously once your income exceeds each respective threshold, deducted independently. This means your combined repayment rate can reach 15% of income above the lower threshold — a genuinely significant deduction worth factoring into any mortgage affordability calculation.

Here's how the numbers work through a real student loan repayment calculator scenario. A Plan 2 graduate earning £38,000 a year. Income above the £29,385 threshold: £8,615. Annual repayment: 9% × £8,615 = £775, or roughly £64.61 a month, deducted automatically via PAYE.

This £64.61 monthly deduction reduces available income for mortgage affordability purposes — on a rough lender-style estimate, this could reduce maximum borrowing by somewhere in the region of £9,000 to £11,000, worth factoring in before assuming your full theoretical borrowing capacity is available.

Official sources & further reading: check your plan and balance at GOV.UK, and read general guidance at MoneyHelper. Check your full borrowing power with our mortgage affordability calculator, or plan pension contributions instead with our SIPP calculator.