FTB: Can't get mortgage because of student loan?

NettleFizz

Hi all.

Thanks in advance for any advice. I've been looking around on the forum but can't find any similar threads, so hope it's ok to post my problem.

My husband and I are first time buyers. We had an agreement in principle with Nationwide, offered for a house and the buying process began. We put in our application for a mortgage (through a broker) and have now been told that in order to have a mortgage we must pay off my husband's student loan. He began uni in 2001 and owes around the £14,000 mark. I thought that this was not a "real" debt and would not be taken into account!!

We do not have the money to enable us to pay it off. The broker has suggested that we can get around this by writing a letter to the bank stating our intent to pay off the student loan after completion and show them a bank statement for an account that we have £14,000 in (and get this money by borrowing it from family). Then don't actually pay off the student loan and give the money back to our family. He says this is acceptable and only a "little white lie".

I'm not sure I feel comfortable with this advice. Is he right? And crucially, is there any other way around our problem?

GMS

'Little white lies' amount to mortgage fraud. Plus if you were the lender and received a letter saying 'We will pay this loan from the savings held in our account after completion' what would you say?

Same as they will, 'Pay if before application'

Of course it is a real debt, it is money owed. Is he actually making payments to it at present?

Do not go down the road of the letter. 1/ It won't work, and 2/ It is fraud

Pont

When I recently got my mortgage with the Abbey I was asked about any outstanding debts. I told them, honestly, that my student loan debts were about £7000. The Abbey said they weren't interested in student loan debts, these were 'ignored' for mortgage purposes.

maninthestreet

Your broker wants you to commit mortgage fraud. What will you do if NW ask you to show evidence of sufficient funds to pay off the student loan AND fund the mortgage deposit???

lynzpower

My mortgage was with Abbey a few years ago and they definately did take it into account then ( 6 years ago)

Interesting that they arnt now!

Pont

Friends of mine have said that for mortgage purposes (Barclays) their student loan debt was taken into account too - so I wonder why in my case it wasn't? All I can think of is perhaps my mortgage was for 75% of the purchase price whilst my friends was for 90%. More likely it was based on the whim of the mortgage advisor that morning as there seems no rhyme or reason as to why some people get approved and others don't!

I was starting to panic a little when reading the above (thought the Abbey advisor had screwed up) but of course they had copies of my salary slips which quite clearly showed student loan repayment deductions - whew!

GMS

Copied from Abbey lending policy:

Affordability

Expenditure

Regular expenditure items need to be included to assess affordability. To include:

• Loans and outstanding credit card balances
• Shared ownership rent
• Services charges
• Maintenance
• Student loans and
• cost of investments to be used to repay interest-only loans

Clearly states student loans taken into account.

Pont

GMS wrote: »

Copied from Abbey lending policy:

Affordability

Expenditure


Regular expenditure items need to be included to assess affordability. To include:

• Loans and outstanding credit card balances
• Shared ownership rent
• Services charges
• Maintenance
• Student loans and
• cost of investments to be used to repay interest-only loans

Clearly states student loans taken into account.

Yikes! I took my mortgage out in September and I know my Abbey mortgage advisor told me that student loans were 'ignored' as they were 'acceptable debt' (whatever that may mean). Maybe I got an advisor with a blasting hangover or such on the morning I spoke to him.

GMS

Or you got an adviser who was after his bonus! At some point a student loan will become due so it is a commitment.

All debt could be described as 'acceptable'.

Hopefully you have budgeted for the payments.

Pont

GMS wrote: »

Or you got an adviser who was after his bonus! At some point a student loan will become due so it is a commitment.

All debt could be described as 'acceptable'.

Hopefully you have budgeted for the payments.

The Abbey could see I was (still am) in payment of student loans as it showed on my salary slips when I applied for the mortgage. Everything is budgeted for as long as I don't lose my job. :eek:

NettleFizz

Thanks all. I didn't really feel comfortable with this suggestion, so we definitely won't do it. We have budgeted for the student loan repayments and we live very frugally and well within our means. I'm not sure why the student loan is suddenly a problem?? Can we try and persuade Nationwide in some way? Or is our best bet to apply for a mortgage with another lender now?