Using student loan as deposit for house?

mikey72

Go for it, it's one of Martin's tips.

http://www.moneysavingexpert.com/family/student-loans

borrow as much as you can, invest it, then take the profit.

Depending on your circumstances, hopefully you will be able to afford to use the nest egg as a deposit when you can buy a house, and be able to pay the repayment on that + your mortgage payments.

robpw2

Baileys_Babe wrote: »

robpw2, would you be happier if OP stopped working & earning and used student loan to pay for everything? If yes, robpw2 you might feel better if you thought OP was investing their wages.

As I said previously fallen_angel09, saving for a deposit is a good idea.

no if you save your own money thats fine but don't claim the student loan if you do not need it
also as i have stated council housing should be for those who need it not because they don't want to pay £4-500 a pcm . I have not denied that when she was 16 she probably did need it but now she can afford to rent privately and someone else could use that house

meds12_2

robpw2 wrote: »

no if you save your own money thats fine but don't claim the student loan if you do not need it
also as i have stated council housing should be for those who need it not because they don't want to pay £4-500 a pcm . I have not denied that when she was 16 she probably did need it but now she can afford to rent privately and someone else could use that house

Why can't she claim the student loan if she doesn't need it? When I finished my degree, I worked for a while with a girl who was studying law and working 4 shifts per week, earning £200 per week - she did this while she was studying and in addition to being a Mum to a little girl. Is there any reason why you cannot get a job, seeing as you have no children to support, and leave student loans "in the pot" for people that truly need them (although who they may be I'm not so sure!). Everyone has the entitlement to take work whilst studying, and it isn't counted for student loan purposes.

Why should she uproot her child now when she doesn't need to, to go into the uncertainty of renting in the private sector? She is trying to save a deposit so she can move out of her council house, freeing it up for another family.

robpw2

meds12 wrote: »

Why can't she claim the student loan if she doesn't need it? When I finished my degree, I worked for a while with a girl who was studying law and working 4 shifts per week, earning £200 per week - she did this while she was studying and in addition to being a Mum to a little girl. Is there any reason why you cannot get a job, seeing as you have no children to support, and leave student loans "in the pot" for people that truly need them (although who they may be I'm not so sure!). Everyone has the entitlement to take work whilst studying, and it isn't counted for student loan purposes.

Why should she uproot her child now when she doesn't need to, to go into the uncertainty of renting in the private sector? She is trying to save a deposit so she can move out of her council house, freeing it up for another family.

why shouldnt she the rest of us have to survive in privately rented housing and have all the uncertanties involved
and trust me if i could get a job i would but 1. i have health problems and 2, im struggling to find somewhere that will give me a chance because i have been out of work for 3 years but i keep trying

ekkygirl

fallen_angel09 wrote: »

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,

Good for you and yes I would use the student loan (if you can manage not to have to use it) as a deposit as the interest is so low anyway.
I baffles me why there is so much negativity on this website from some people.
Thankfully there are some very clued up people who offer great advice, sometimes ya have to "run the gauntlet" to get it.

lyndasharp

I claimed the full student loan, even though I didn't need it. I took a gap year and saved up, so with that and wages when a student, I just put my loan straight into an ISA. It was immensely useful, and I wouldn't have been able to buy this house without it, or fund myself through a Masters course. Admittedly I now owe more than when I first took the loan out, as I'm not particularly highly paid, and at the current rate I won't have paid it back until after I retire! However when I did have the loan money in my account (before I spent it on the house) I was always earning more in interest on the savings than I was paying in interest to the loan company. It was really reassuring to have the 'just in case' money in the bank, as you just never know what's going to happen, and had I been unemployed for a bit it would have stopped me getting into debt as I'd still have had that money to live off!

I'd say go for it to the OP, and good luck!

Edit: I had no trouble getting the mortgage (18 months ago) and they didn't care that I had a student loan.

milliebear00001

People have been claiming the student loan and investing it for donkey's years - nothing new at all in this. It makes perfect financial sense to take it, whether you need it or not, invest it in a tax-free savings account then pay it off when it starts costing you more than it's earning.

I don't see too many probs with the OP's idea of using it for a deposit. The (low) repayments will be taken into aco!!!! by the mortgage co, and it will means she doesn't have to save from scratch when she graduates and gets a better paying job.

Lokolo

robpw2 wrote: »

i have £3200 to pay my tuition fees
last year i got £2200 each term not excluding the tuition fees loan which get paid to the uni that works out at £6600 which is at least 6k

You get full loans and grants and you don't save anything!?

What the hell do you spend the money on!?

jockosjungle

Actually its not much of an investment idea anymore, the interest is based on inflation so its only good if you can get more in interest than the rate of inflation, this isn't necessarily the case anymore.

Martin (in the article) is not advocating that people take out a student loan and spend it on a house, he is merely stating that you may be able to take out the loan and get more in interest from a bank than it costs you. I don't think anyone is advocating taking out a loan to raise a deposit, although the student loan is different in that it won't show on a credit report and won't be included in your mortgage calculation, it is still a loan that you need to pay back. As I said in my other post, its a loan that racks up over the years and will leave you paying an extra 9% tax above £15k.

Trust me, it might not seem like a lot of money. But when you've got a mortgage, children, a lifestyle,etc. Paying back £100 a month until you retire is money you may need. Especially if you find yourself unable to get a job that lets you get greater earning potential because of your degree

R

milliebear00001

But presumably the OP is planning on working towards a well-paying job that will enable her to pay a mortgage AND her student loan debt - isn't that what most graduates do? All she's doing is bypassing the 'saving for a deposit' years by keeping the money on ice for now which she's doing by working damned hard to hold down a job while she studies.

There are many students who take out full loans and then manage to pay their mortgage and the repayments on their student loans - it's what most of us expect to do.

If she didn't have a child, I'd say maybe don't take the loan and save once you have the well-paying job - it's not quite the same when you aren't the typical free and single student and have another body to provide a nice, stable home for.