What to do with a loan that will be forgiven in about 10 years?
Hi! I have a special type of loan. There's a minimum payment each month (but for me at the moment it's zero because of my lower income). All that's not paid off after 10 years (it used to be more, but 10 are left) will be forgiven.
Should I just wait it out? Or try and pay it off anyway? That would feel like throwing money away. Then again it sits in the way of us getting a proper mortgage.
It's just how it works in our country. The banks use a factor of almost 2 of the original debt to lower the amount you can get for a mortgage. This is because the monthly payments lower your monthly available budget. So, even if you're almost done paying it off, they still use the original debt since that informs your monthly payments.
I have a similar situation that I debate as well. I have student loans ($53,000) that can be forgiven after 10 years of working at a non-profit agency when I make an income based minimum payment. Truthfully I'm going to pay ahead when I can, in the hopes of ridding myself of that weight sooner and start working towards my other life goals (owning a house, saving for retirement, etc.). But should I feel that I can't or life throws a wrench in, it simply pushes back my minimum payment when I pay ahead, rather than having to make the monthly payment next month. I'm not sure how you're payments are structured, but that's how I look at my situation.