mortgage with a student loan?

pixie79_2

Hello

I was wanting advice on wether my student loan affect my chances of getting a mortgage?

It was taken out around 1998, I only started earning over 15k last year so the Student Loan Company started to take the money out of my wages automatically each month so I haven’t missed a payment.

On the plus side I also now earn around 20k and have more than 15k in my savings.

I’ve worked continuously since I left Uni and have no other debts whatsoever, never taken out a loan or credit card or anything of that nature.

Even if they look at the student loan, the rest of my credit rating would be fine, I’ve had a steady income since around the year 2000.

Advice please?

Many thanks

TEDDYRUKSPIN

They will include the monthly repayments into account and the size of the student loan. This is still included in the liabilities section and will be shown on the direct debits etc.

gazebo

that type of student loan would not affect your ability to get a mortgage at all.

However, as you appear to have never had any credit, you may struggle to obtain a mortgage as you have no credit history for the mortgage company to base their decision on.

Have you had a contract mobile phone or any other form of credit agreement (like a student overdraft?)

Loans taken out in 1998 are linked to your earnings and are deducted as though an additional tax every month - at a rate of 9% on any amount you earn over £15K per year equivelant

as such, the actual amount you pay each month can fluctuate quite significantly if you are in receipt of bonuses, overtime etc - so I don't know that the repayments can be accurately reflected in your affordibility - also, the loan does not appear on your credit file so the mortgage company would not know of its existance until it potentially scanned your payslips when working out affordability.

pixie79_2

i have a mobile phone contract which i have paid for 10yrs direct debit, i also had an overdraft of 800 which i paid off in under 2yrs if that helps.

Bufger

pixie79 wrote: »

i have a mobile phone contract which i have paid for 10yrs direct debit, i also had an overdraft of 800 which i paid off in under 2yrs if that helps.

Thats the only thing i had too. As long as you're also on the electoral register you'll be fine with this info (i was with Natwest anyway).

If you're planning on getting your house in 6 months + then it wouldnt hurt to get a credit card and pay for some things on it and pay it off within the month, that'll only help you more.

Person_one

I am buying my first property and both my partner and I are repaying student loans. None of the mortgage providers we talked to would have taken it into consideration as it is linked to earnings and comes out of your wage each month automatically.

As far as not having a credit history, my partner has never had a credit card but has a history of savings. I think if you get your mortgage from somewhere you have a history with (like the bank where you have your current account) they can look at that history rather than a credit history.

This is my first post though so please don't take anything I say as advice!

pixie79_2

i have a mobile phone contract which i have paid for 10yrs direct debit, i also had an overdraft of 800 which i paid off in under 2yrs if that helps.

gazebo

well they will count towards building up a credit 'history' and as such should put you in a better position to be accurately assessed based on risk.

in terms of you student loan affecting your ability to get a mortgage - I wouldn't have thought so given that it's not like a normal loan as mentioned above

My opinion is as long as you base your own affordability on your actual salary every month (after deductions of tax,NI and student loan) and take into account the extra expenses that go along with owning a property in addition to mortgage payments (council tax, electric, gas, insurances, repairs, tv licence etc etc), you'll know how much you can really afford to borrow.

Don't know if this helps at all?

pixie79_2

I’m looking at houses in the region of 75k, so I’m not overstretching myself.
I can comfortably afford a deposit of a minimum of £7500, could go higher as I predict I can save another £2000 in the next 4 months as I currently live with parents and can save (there im lucky)
My parents are paying all the start up fees as well.
I also work for a Government Agency, don’t know if that helps, as It’s a very safe job at the moment, Ive been there 3 ½ yrs and have recently been promoted to an officer, do they take the type of job and stability into account.

I may be panicking a bit too much, but I’d rather go in with my eyes wide open!

Thanks

pixie79_2

Also, I've worked out on estimated bills and spending I would have between £200 - £300 a month left after all my bills and an estimated £400 p/m mortgage.
Thats based on a £75k property with 10% deposit, over 25 yrs on a 5% interest rate.

After NI, tax, pension and student loan, I have around £12000 net pay a month

gazebo

I'd say a good starting point would be looking at the mortgage guide on this site as it's full of really helpful info - though the disclaimer on it is that it was written before the market really started to struggle.

I think it's a good idea to look at all of the costs involved before looking at properties.

The bigger the deposit compared to the value of the house will give you a little more choice when it comes to mortgage products (known as the LTV = loan to value).

At present you're putting forward an estimated 10% deposit, which is good, but a 15% deposit would be even better.

Additional costs to factor in are the product arrangement fee (can be any amount - but a quick search brought up some starting at a whopping £995), solicitors fees and potentially any survey fees.

Your time with current employer will stand in your favour.

The biggest thing to be aware of is that it isn't easy for anyone to get a mortgage at the minute because of the current financial climate.

As a few people have already mentioned above, you could try approaching the bank you currently hold your savings and current account with - but they may not provide you with the most competative rates.

The other options are to go via a mortgage broker, but remember that there may well be additional costs involved with this as well.

Sorry I can't be of any more help - it's really just a case of research and a favourable mortgage lender.