Student Loan affecting getting a mortgage

ja9_c

Hi there

I'm hoping someone can advise. I am have a problem getting a mortgage and it seems that my Student Loan replayments are affecting the amount I can borrow - I appreciate that I looking for a fairly high 79% LTV however I am 28 years old, no debts and a £50,000 deposit. My mortgage broker says that I am passing the Credit Check however when he entered the details of my student loan (£187 per month) they are deducing this from my gross salary which is leaving me way off the amount I need to borrow.

Martin's recent blog states that the new student loans do not go on your credit file however it seems it is impacting on affordability.

Can anyone advise?

Thanks

themull1

Its obviously impacting on your affordibility, not much else to say really!

CLAPTON

how much do you still owe on the student loan?
the affordability calculation is usually based on the monthly payment and not the total debt so it may be better to pay off the student loan and free up the 187pm to get the mortgage you want

pinkarsenalprincess

Our student loans weren't even taken into account when we applied for our mortgage last year. I would query this.

somethingcorporate

Mine just appeared on my latest mortgage application as an unsecured loan.

You maybe need to try another lender - it is of course up to them as to what criteria they consider before offering a mortgage.

alexlyne

IIRC, when we got our mortgage (last year), the max amount that we could borrow was based on a multiple of [salary - loans] (possible 3.5x i think), which is very plausible from the banks pov as it's the ability to pay off their debt which is important to them, which is less likely to happen if you have other debts. It's nothing to do with credit records or anything sinister like that.

If your income is around 40K per year, and paying off only 2.2k of that on the loan, then being 'way off the amount you need to borrow' sounds like you're pushing to the absolute maximum the money that any bank will give. Try another lender or reconsider your expectations...

CloudCuckooLand

ja9_c wrote: »

I am 28 years old, no debts...

A Student loan is a debt.

As a regular outgoing, the monthly payment has to be considered. How much effect the Lender attributes to it may vary and could depend on some of the fine detail - your broker should know the best lenders to approach, having the full picture.

If £187 is "way out", then you are pushing to the max, as alexlyne suggest.

What happens if you need a £2k boiler suddenly, or start a family unexpectedly?

I suspect you are going for one of the better deals/pickier lenders - HSBC? And they are cherry-picking as usual.

ja9_c

Thanks all for the advise - I believe I have around £12K left on student loan so too much to pay back.

I'm just surprised that they would take this into consideration seeing as it a nominal amount and is deducted before my take home pay. I think it should be considered like an electric bill or council tax - Expenses which need to be paid after the mortgage payment has been deducted from your monthy salary. They don't ask you for how much you gas bill is on your mortgage application - then again this is in my ideal world!

I definately am pushing the amount I want to borrow to the max but with such a sizable deposit and relatively debt free (IF I have to include the student loan!) I did not think it would be this difficult. Going to try Halifax today.....

On addition I have an extra £5K emergency fund for the boiler replacement!!

surreybased

General living costs (like gas bills) are included in affordability calculations and I think the comment about the boiler was an example of spare funds available in the event of an emergency.
What did the mortgage broker suggest was the amount you could apply for?

Rov

I dont understand how £12k is too much to pay off and yet you have a deposit of £50k.
What's the interest on the student loan? how does it compare with the mortgage rates you are looking at?

herbiesjp

What is the actual mortgage amount you need?

What is your actual gross annual salary?
What other debts do you have?