Will I still get a mortgage if I still have student loan to pay off?

Just a question that recently popped up, if I have say £30~40k of loan to pay off from my student finance, and I get a job earning around £25k/year, will I still get a good enough mortgage to buy a house, or will I have to live on rents until I can pay off all my loan first?

How badly is your credit rating affected by the student loan, like if its a lot will the mortgage company get scared and not give you any mortgage?

Thanks.

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Reply 1

snail_87

If a whole generation of people couldn't get a mortgage because of student loan, no-one would take it. I don't think it makes much difference as i know plenty of people on that kind of salary with a student loan that have managed to get a mortgage.

Reply 2

Nonsmoking

Yes, but your student loan may affect how much of a mortgage you can get. It's one of the things some banks ask about when deciding the maximum they can lend you.

Reply 3

JCM89

When you fill out an application form they do ask what your student loan repayments are so they will take your repayments into account when determining whether you can afford the repayments on a mortgage. The main concerns with a mortgage application is to make sure you've paid down any bank loans / credit card debt / overdraft as these are at far less advantageous rates than your student loan.

Reply 4

zZ_creator_Zz

JCM89

really? where did u get this information?

thanks all.

Reply 5

JCM89

zZ_creator_Zz

really? where did u get this information?

thanks all.

I have a mortgage now - guaranteed and paid for by my dad as its cheaper for me than renting and I'm on a long course (5 years) . The mortgage application asked for student loan repayment information - I'm still studying (and borrowing) so I don't have any repayments yet. Our financial adviser told us that credit card debt and bank loans would disadvantage the application.

Reply 6

Talya

Nonsmoking

Yes, but your student loan may affect how much of a mortgage you can get. It's one of the things some banks ask about when deciding the maximum they can lend you.

They don't care about it.

JCM89

I was never asked on my application for a mortgage. I told the lender about it and they said student loans don't matter.

Reply 7

JCM89

Talya

They don't care about it.

I was never asked on my application for a mortgage. I told the lender about it and they said student loans don't matter.

It must depend on the lender then whether they ask the question.

Reply 8

Talya

Well you pay back the student loan depending on your earnings, not your level of debt.

Your advisor told your CREDIT CARDS and BANK LOANS would disadvantage your application. Not student loans. A student loan is NOT a bank loan.

Unfortunately I can find absolutely no concrete statement from the SLC on this at all, which is upsetting. On 25k you would have student loan payments of about £60-70 pm i think at the moment, regardless of the amount you owe.

Manchester university say this

Mortgage lenders also seem quite relaxed about debts to the Student Loans Ccompany. Organisations such as Abbey National, Halifax and the Nationwide building society said that in assessing a mortgage application, they are less interested in the size of an outstanding student loan than whether a borrower will have sufficient income after meeting other outgoings to cover the monthly mortgage repayment

however a poster on housepricecrash.co.uk says they were refused a mortgage with the teacher's building society due to their student loan.

Seeing as there only seems to be opinion out there, I'll give mine: Don't worry about your student loan. Make sure you do NOT accrue ANY other debts (so no overdrafts you can't pay back, credit cards or personal loans) and save up a decent deposit. You'll be fine.

Also don't miss any payments on your student loan as this could cause problems with your credit history, thisismoney.co.uk says.

Reply 9

c444a111

put down a 30% or more deposit and you'll be fine
I'm a mortgage broker.

Reply 10

zZ_creator_Zz

Talya

so your saying no matter how much debt you are already in from the student loan (ie £30~50k) it won't matter at all? or very very slightly?

thanks.

Reply 11

Thiefie

Having a student loan doesn't disqualify you from taking a mortgage and in fact the lenders do NOT take into account whether or not you have a student loan when making their decision. This is because your student loan repayments are taken from your gross income and not net. Ie, the deductions occur at the same time as tax and NI, thus it reduces your net and therefore disposable income.

The lenders use the net income figure to calculate how much you can afford to borrow using an LTV ratio (loan-to-value) and work out if you can afford the repayments compared to the value of the asset you want to buy. Obviously there are further considerations that a lender will make before making their decision.

By virtue of the fact that the student loan reduces your net income the bank does consider and may deem you to be not eligible. There are more factors than just a student loan they consider.

Hope this helps!

Reply 12

Thiefie

In addition to my post above. Lenders at the minute are currently more concerned about how much you would be able to pay in a deposit (as a percentage of the asset value). I think you'll be hard pushed to find a mortgage requiring you to put down less than 10% and expect a figure of somewhere between 15 and 20% in most situations now.

Reply 13

Nonsmoking

Talya

They don't care about it.

I was never asked on my application for a mortgage. I told the lender about it and they said student loans don't matter.

Wrong. Maybe your bank didn't care, but some do. See this link - Nationwide take into account your student loan in deciding how much they'll lend you.

Reply 14

Thiefie

Nonsmoking

Wrong. Maybe your bank didn't care, but some do. See this link - Nationwide take into account your student loan in deciding how much they'll lend you.

See my above posts. The calculator only features student load for the reason i detailed above.

Reply 15

c444a111

Listen I am a mortgage broker I know my stuff
30% deposit and you will be fine stop fretting mate ok.

Message me if you want more advice. or even the mortgage arranged via my broker-ship

Reply 16

happydinosaur

Nonsmoking

Wrong. Maybe your bank didn't care, but some do. See this link - Nationwide take into account your student loan in deciding how much they'll lend you.

at least a student loan repayment is based on how much you earn rather than a bank loan where how much you earn will have no bearing on how much they want back each month. My dad is a mortgage underwriter and told me not to worry about my student loan, even if a certain bank took it into account it won't be a huge issue.

Reply 17

Nonsmoking

happydinosaur

Yeah, I don't even know why they bother asking. Although I guess if you have £40k of student debt like the OP then it's pretty relevant.

Reply 18

JCM89

Talya

Obviously.

I was replying to OP who asked whether they'd have to pay off their student loan before getting a mortgage. My answer was no but the lender (in my case) did ask if I had a student loan so I did have to declare that I had even though as I'm not making any repayments on it.

I was advised that bank loans and credit card debt would affect the mortgage because, obviously, these affect disposable income. So, going back to OP's post - the advice is to pay off as much credit card / bank loan debt as possible before applying for a mortgage as this will affect the amount that they will be able to borrow but it is not necessary to do this with the student loan.