'Will new student loans stop you getting a mortgage?' blog discussion

jamesd

Assuming 3% wage inflation that £17.5k number s right but look at the 50th percentile median income in 2007-8: £18,500. 25th percentile was £11,800. So even with no change except wage inflation that's still something like 40th percentile gross income before anything has to be paid.

yorkshirekev

The problem I see is that nobody can stop the banks from taking student loans into consideration. Each will have their own lending criteria and for some people, their student loan will tip them over into being rejected.

Would have preferred a more straight-forward graduate tax myself. Something like an extra 1 percent on income tax for the rest of their career. No complications about debt, thresholds and the write-off dates.

EMF57

It was a relief in part to read that Martin thinks the loan repayments aren't part of the credit rating as such, though would be taken in to account as an outgoing from a monthly salary when considering a mortgage offer. I've asked my MP to try to get an answer to this very question as well though I think I'd be better talking to one of mortgage providers directly to see what they say.
One of my concerns is that I have daughters. At some point they may have children and then may not earn for a while or more likely work part -time. I don't see them ever paying off their sudent loans because of this factor. Even the low interest payments on the loans will outstrip the amount being repaid on a decent,but part time salary.
If the student loan is indeed regarded by morgage and loan providers as more like a tax, then I will be a little less anxious, but I think this is a question that needs a definitive answer for the sake of this generation taking the risk of a university education that may not benefit them in the long run.
Incidentally, Germany, a country not unlike our own, can still afford to charge tuition fees of around £500 per year. Strange.

jamesd

yorkshirekev wrote: »

The problem I see is that nobody can stop the banks from taking student loans into consideration. Each will have their own lending criteria

The banks are required to take the loan repayments into consideration by the FSA's proposed mortgage lending rules. All committed expenditure has to be taken into account. It's not a matter of individual bank discretion, it'll be the rules.

Jack's_Dad

This raising of the tuition fees has been promoted by the Government as a way of reducing the huge national debt. If a student is now to pay £9k a year rather than £3k then the Government will have to fund the £9k and possibly have it repaid, albeit eventually

Overall the Government is still, and will for many years, be paying for the Universities upkeep, either directly or via the students, so how does this diminish the national debt?

I simply do not understand how this will save money or is this just an excuse to raise fees?

Just as an aside the Labour Government ordered private jets (Presidential transport?) to transport the Government wherever it wished to go - have these been cancelled to save money? I have not heard any reports about the aircraft for some time

eastberks44

With average house prices at £160k plus and even one bed starter flats starting at upwards of £100k in most parts of the country, graduates are going to need to earn much more than £21k before they can even think about buying a home. If someone needs to earn £30k to get on the bottom rung, or £50k to buy a home that can accommodate a family, then at these salary levels they would be able to pay off a current student loan quickly but under the new system they WILL be hit with high real interest rates, prolonging repayments for far longer.

Julian

jamesd

Graduates can do the same things that the rest of the population on incomes below £21k does to buy a home, but with more chance of a higher income in the future that will make it easier. Fortunately it's not necessary to earn £50k to be able to buy a home that is suitable for a family. A two bedroom flat will suffice for a family of two adults and one child and I recently bought one of those for less than £75,000. That's just £7,500 deposit and £67,500 borrowed, both affordable on £21k income with a modest lifestyle.

This isn't doable in the most expensive areas, like London and the South East, but there's nothing requiring graduates to live in the most expensive parts of the country, or to buy on their own instead of renting or joint purchase.

pjala

jamesd wrote: »

Graduates can do the same things that the rest of the population on incomes below £21k does to buy a home, but with more chance of a higher income in the future that will make it easier. Fortunately it's not necessary to earn £50k to be able to buy a home that is suitable for a family. A two bedroom flat will suffice for a family of two adults and one child and I recently bought one of those for less than £75,000. That's just £7,500 deposit and £67,500 borrowed, both affordable on £21k income with a modest lifestyle.

This isn't doable in the most expensive areas, like London and the South East, but there's nothing requiring graduates to live in the most expensive parts of the country, or to buy on their own instead of renting or joint purchase.

And do you live in your £75000 flat?

LittleAnn

Nationwide has just refused my son's mortage on the basis of his student loan. It was going swimmingly until they asked to see his SL statement (even though he is paying it through his pay).

:mad:

The_Jakal

LittleAnn wrote: »

Nationwide has just refused my son's mortage on the basis of his student loan. It was going swimmingly until they asked to see his SL statement (even though he is paying it through his pay).

:mad:

Are you serious? This is a big shock!!

I have close ties with the student money saving community and if this is true then it could certainly be a huge story.

Has he applied for a mortgage anywhere else since?