Using student loan as deposit for house?

fallen_angel09

Hi All,

Appologies if this is in the incorrect place...

I am a single student mother, just finished my 1st year at university. As a single parent I am entitled to a fair ammount of grants and loans from student finance.
I also work full time (well 30hours), I started this job in March, so my 1st years loans etc was used to live off, I have put 1k of it into a 5 year bond thing.

Year 2 - I will be able to live off of my wages so I want to think wisely about how I use my student loans.

My hope is to save them, put them in a high interest ISA, and when I finish uni and have a decent job, I was planning on using it for a deposit on a house. If I do not use this money, the chances of me ever owning my own property are slim as I will never beable to save a large enough deposit.

I currently live in council housing. I am still young (20) but I need to think hard for my sons future, I do not want to rely on 'finding my prince and living happy ever after and being able to buy somewhere with someone else, meaning half the deposit for me' I want to be independant,

ANy help gratefully recieved

robpw2

If you can afford to save your student loan then should you really be in council housing ?

fallen_angel09

I was given the flat when my son was a year old and I was 16, I then went on to do A-Levels and attend university, got a job so I can help my self move out of council housing and onto the property ladder, this giving someone else in a more needy circumstance than me.

I do not see the relevance in that though - I came on to ask if this was a sensible choice, not for you to question my living arrangments.

opinions4u

Borrowing for deposit, especially when the threat of rising inflation (your interest rate) is around, doesn't strike me as wise.

Why not just refuse the student loan. It isn't compulsory is it?

If I do not use this money, the chances of me ever owning my own property are slim as I will never beable to save a large enough deposit

I find this statement odd. Surely your plan is to get a degree and then earn more money than you do now? Save the deposit out of that perhaps?

_Andy_

No mortgage lender will accept a student loan as a suitable source of deposit.

AnxiousMum

I guess some people would rather you just didn't try to improve your lot in life and stayed in council housing the rest of your life eh?

I have a son just heading to university - he is going to take as much student funding as possible, as it is the lowest interest rate of any loan he will get for years! If he doesn't use it all - great - he too will have some money at the end of it - but we do know that he will have to fully fund one year out of his course in year 4 before the NHS takes care of the other two years. He will be living on a budget, using money he has earnt, trust fund for uni etc. and student loans. Will he need it all each year? No....he won't. But he has no guarantee that he will have work in the summers during university etc., just as you have no guarantee your job will carry on in the same way it is now. If you have taken the student loans, you can at least carry on with your studies, or if you don't need it, use it as a deposit on your own home. If I were living in a council estate in our area with children - I'd be doing whatever I could do to get them the heck out of there - ones in our region are certainly not where I would want to raise children Good for you - too bad many other 20 year olds don't have the same outlook and are prepared to sit on benefits and handouts the rest of their lives. Your student LOAN is just that - a loan - maybe subsidised.....but it's still a loan that you will be paying back.

AnxiousMum

_Andy_ wrote: »

No mortgage lender will accept a student loan as a suitable source of deposit.

In five years it will be just savings in an ISA account - she's not talking about using it in September the day after it's deposited into her account! She's also working

robpw2

AnxiousMum wrote: »

I guess some people would rather you just didn't try to improve your lot in life and stayed in council housing the rest of your life eh?

I have a son just heading to university - he is going to take as much student funding as possible, as it is the lowest interest rate of any loan he will get for years! If he doesn't use it all - great - he too will have some money at the end of it - but we do know that he will have to fully fund one year out of his course in year 4 before the NHS takes care of the other two years. He will be living on a budget, using money he has earnt, trust fund for uni etc. and student loans. Will he need it all each year? No....he won't. But he has no guarantee that he will have work in the summers during university etc., just as you have no guarantee your job will carry on in the same way it is now. If you have taken the student loans, you can at least carry on with your studies, or if you don't need it, use it as a deposit on your own home. If I were living in a council estate in our area with children - I'd be doing whatever I could do to get them the heck out of there - ones in our region are certainly not where I would want to raise children Good for you - too bad many other 20 year olds don't have the same outlook and are prepared to sit on benefits and handouts the rest of their lives. Your student LOAN is just that - a loan - maybe subsidised.....but it's still a loan that you will be paying back.

no thats not what i mean im glad she is doing uni and working and it is good to see that she is trying to better herslef but what i mean is that there are many people desperate for a council house who cannot get one and are on the streets homeless whilst she is saving her loan money because she doesn't need it but cannot afford to get a privately rented property and let someone else have the council house

fallen_angel09

Thanks anxiousmum I think you wholly understood.

Just to clarify, I do not intend on getting a mortgage for atleast another 2 years, after my degree is finished.

I was asking whether it is a sensible choice to use the student loan as a mortgage, or if there is any left once I have graduated, I should just pay it back straight off...

To the post who asked why I couldnt use my wages once graduated to save for a deposit, because it would take me years and years to get that ammount of money together, so, rather than 'wasting' the money, or paying it straight back, I thought I might use it towards a deposit for a house, ok I might still be paying it back for years to come, but at least it gets me out of the place I am in sooner, and into our own home,

opinions4u

robpw2 wrote: »

If you can afford to save your student loan then should you really be in council housing ?

Are council tenants not allowed to save?

I may have got the wrong end of the stick here, but I think you're out of order.

fallen_angel09 wrote: »

To the post who asked why I couldnt use my wages once graduated to save for a deposit, because it would take me years and years to get that ammount of money together

That's what the rest of society has to do.

so, rather than 'wasting' the money, or paying it straight back, I thought I might use it towards a deposit for a house, ok I might still be paying it back for years to come, but at least it gets me out of the place I am in sooner, and into our own home,

While the repayment terms on a student loan are generous, there is no guarantee that the interest rate will always be low and I don't think it's a good idea to keep unneccessary debt in order to obtain even bigger debts.

I think a slower and more cautious strategy towards home ownership is appropriate.

You have doubtless made some tough calls in life and come through them. From what little you have posted here you are probably a very resiliant individual who has a detemrination to improve her lot. I suspect you will succeed longer term as well. I would, however, recommend a cautious approach to any debt, be it mortgage, personal loan, credit card, overdraft or student loan. Don't overexpose yourself.

fallen_angel09

robpw2 wrote: »

no thats not what i mean im glad she is doing uni and working and it is good to see that she is trying to better herslef but what i mean is that there are many people desperate for a council house who cannot get one and are on the streets homeless whilst she is saving her loan money because she doesn't need it but cannot afford to get a privately rented property and let someone else have the council house

Call my selfish and pig headed, but no I do not intend on going from a council house where my son has a secure home, I pay £300 rent (out of my wages may I add) to go into private rented housing where I will have to pay £500 + and put myself and my son in a WORSE position than we are now.

As a mother I am not willing to do that, however, I am willing to do all I can to get us out of that flat so I can move into a nice house, and let someone have my council flat.

I was not in that position when I first got the council flat, I was doing my GCSES.

I understand that is your opinon, but there is no use taking the post off topic and telling me your opinion on people who dont NEED council housing.

I am not the first person to be in a better position 3years after moving into council housing, but still keeping the flat. There are people out there who have children to get a bigger council property, benefit scammers the list is endless. I do not see what is wrong with what I am doing.....

As I said previously I did not ask for your opinion on my living arrangments, that I was a teenage parent, that I am a single parent (not that you have given me your opinion, but its the same thing...) I asked whether it would be a sensible choice to use any left over student loan towards a deposit on a house!!!!

My goodness how has such a simple query turned into a debate around the contents of my life!!