Student loan confusion, Nationwide change form required - any cause for concern?

theycallhimsim

Good evening to you all,

I'm a first-time poster seeking a little advice. My girlfriend and I are in the process of buying our first home and today, we received an email from our solicitor advising that the seller can complete on 1st March. In the email, he highlighted a clause of our mortgage that neither we nor he had previously noticed.

My partner and I both work full time in the same role and our combined annual pre-tax pay is £33456. We're buying a home for £80000 with a £34000 deposit. Nationwide have offered us a mortgage with repayments at £225 per month on a 5 year fixed rate, but a special condition has been attached:

""This offer is issued on the understanding that the following commitments will be repaid on or before completion of this loan:- Student Loan with Student Finance with an approximate balance of £9000, Student Loan with Student Finance with an approximate balance of £7500. While these debts may be repaid from the proceeds of this loan, they may not be transferred to any other lender. Your ability to afford this loan has been assessed on this basis."

Both of us have student loans of the kind that expire automatically when we turn 65, with repayments at 9% of any earnings above £15795 per year until then. At our current income, this equates to £7 per month per person. The payslip I submitted in support of the mortgage application was from a period when I was seconded into a higher-paid role - my loan contribution that month was £102, which Nationwide have apparently listed on their records as Ashley's contribution, not mine. In addition, my take-home pay that month was £600 higher than normal, with secondment allowances and my basic salary both clearly displayed on the payslip.

I've emailed my broker payslips from January, showing that SLC deducted £6 from my wage (which is no longer based on seconded terms) and £18 from my partner's, as she worked overtime and earned slightly more. After deductions and tax, our take-home that month was still in excess of £2350, so we would feel that the loan has no impact upon our ability to afford a mortgage payment of 10% less than our combined wage. I've also had the opportunity to very briefly speak to my solicitor, who advises that the clause took him aback somewhat and, on the basis of the figures I gave in our conversation, does not believe it to be necessary or relevant to our situation.

We, however, aren't the lender, and my best efforts to reassure my girlfriend that there's no cause for concern have gone nowhere because, quite frankly, I don't really know what I'm on about. I would probably have identified this clause some weeks ago had I known what I was on about, after all. Nationwide have advised me to have a Material Change Form submitted by our broker but gave no indication of whether this would definitely be accepted or of how long a revised offer might take. Does anyone here have any experience of this kind of situation and can anyone advise on whether this is likely to be a major drama or a simple formality?

With thanks in advance for any advice you can offer. "Pay more attention in future," incidentally, does count as advice...:o

Adam

kingstreet

If the loans were disclosed on the application, someone may have ticked the box to say they would be repaid on completion. Nationwide would not insist on this unilaterally, if they insisted they be repaid, they would have contacted your broker before issuing the offer to tell him that's what they wanted.

So, were they disclosed and was the "repay on completion" box ticked? Check a copy of the application summary, from your broker...

Run an affordability calculation with, and without, the loans and see how it impacts your affordability. If it doesn't, you are likely to see Nationwide simply remove the clause. If it does, they will want the loans repaid, reduced or will reduce the mortgage amount accordingly.

http://www.nationwide-intermediary.co.uk/calculators/aff_calc

theycallhimsim

kingstreet, thank you for a very helpful, reassuring response.

Our student loans aren't shown at all on the broker's application summary. The spaces are completely blank. Upon seeing this, we contacted the broker, fearing that failure to disclose would have an impact upon the application. We know that the information must have been passed to Nationwide in some way, shape or form, but while the broker called us to acknowledge receipt of the information, I have nothing from them to indicate exactly what they told Nationwide.

Using the affordability calculator you kindly linked to, it would appear that in our circumstances, the maximum amount available for borrowing would be over £166,000 and that even if I was paying £102 in student loans each month on my current salary, Nationwide would still lend us a maximum of £146,200. Given that we're looking to borrow over a hundred grand less than that, I feel much happier that it should be a straightforward exercise.

Thanks again for taking the time to help us out, kingstreet - it's much appreciated.

kingstreet

Some lenders find undisclosed credit and demand it be repaid. Nationwide may simply have done this, if the loans weren't disclosed on the application.

They probably picked them up from your payslips, or bank statements if they don't show on the credit check.