Wondering about a future mortgage

kimberleyanddarren

I am in the process of saving for my first mortgage however i have a few questions im hoping someone can help me with.

I have approx. 10,000 in student debt - will they consider this when im looking to get a mortgage? Will it stop me getting one?

Secondly what kind of deposit can i be expected to have (as a minimum as i am trying to get out of rented asap) for an approx 100,000 house? I know you cant be exact but would like an end target in mind.

Finally would it be worthwhile going to visit the banks to see about mortgages etc. even though i am only about half way to what expect i will need for a full deposit?

Thanks

GMS

Student debt will be taken into account for affordability purposes.

You would need a minimum 10% deposit so £10,000 on a £100,000 purchase.

Better to see a good broker rather than trawl round banks. Some banks will not deal with brokers so make sure you check these too.

kimberleyanddarren

would my student debt be likely to put a hold on getting a mortgage until it is paid off or is it general not seen as a big issue? I am worried if i save up 10k deposit and have 10k student debt they wont be interested in giving me a mortgage.

GMS

The student loan will be classed as a credit commitment. It will not stop a mortgage on its own but if it is deemed to be unaffordable because of the loan it would do, or reduce the amount of loan available.

Without the deposit you would not get the mortgage so a catch 22 situation really.

kimberleyanddarren

Thanks for the advice, i just wasnt sure if they would tell me to take my 10k and pay off my debts which i dont want to do as its been alot of work saving that much money and i wouldnt like to spend it all in one go clearing my student debts and be back at square one. There is alot to learn with this mortgage stuff and what information i find online tends to be different to what happens in reality lol

GMS

As a first time buyer a broker can be invaluable to you for the very reason you mention.

On line advice can be anything from excellent to fairytale, and there is no way to know until it is too late.

Speak to a good broker and ask as many questions as you like, regardless of how silly you may think they are. No such thing as a silly question.

InMyDreams

kimberleyanddarren wrote: »

pay off my debts which i dont want to do as its been alot of work saving that much money and i wouldnt like to spend it all in one go clearing my student debts and be back at square one.

Paying back a loan is not spending money. You've already spent the money. That's why you have a loan. There is no 'going back to square one'. If you have a £10K debt and £10K in savings, you are now quits. Don't get sentimental about this. Sentimentality is not a good reason to pay or not pay back your loan. Whether or not it makes financial sense to pay back a student loan is another story. I suspect on balance still not (and there's no changing your mind if you do) but I'm not up-to-date on what the current implications are with regards to mortgage criteria.

Don't be fooled into feeling you have savings if all they do is cancel out your debt. That's not to say that you can't engineer this situation to use some of this borrowed money as a deposit. Student loans certainly used to be a bit of an exception, but how much that it still the case I don't know.

kimberleyanddarren wrote: »

what information i find online tends to be different to what happens in reality lol

What happens or what happened in reality? Things are very different in the world of mortgages than they were. Check how old your anecdotal evidence is.