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Paying off Student Loan to get Bigger Mortgage

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Hi there; I am new to posting (long-time lurker) on MSE so hopefully I have put this in the correct place.

I have question and would be interested to hear people's views......

I would like to move home, but where I would like to move is probably the top end of what I could get a mortgage for. I am confident I could meet the repayments of such a mortgage, but getting the full amount is proving difficult.

What appears to make the difference is not including student loans in my application. I have ~9k student loan left. If I paid it off, I could then get an extra ~20-30k mortgage.

Is it worth paying off the student loan (rather than doing my regularly mortgage overpayments) so that I can get a bigger (more expensive) mortgage?

Moving home is expensive so I would rather do it once and take a bit of hit now, rather than having to move again in say 5 years.

I would be interested to hear people's views, or if they have faced similar situations...

Thank you.

Comments

  • Let_Us_See
    Let_Us_See Posts: 1,319 Forumite
    Many lenders will completely ignore a student loan and even if taken into account (you don't mention your monthly payment) it shouldn't make too much of a difference in borrowing capacity. Perhaps it comes down to the simple fact that what you think you can afford is different to lenders' own assessment?
  • Thanks for the response, I think you are right 'let us see', I do probably think I can afford more than banks think I can, either rightly or wrongly. When I first got my existing mortgage I don't think they considered by student loan. But post 2007 it appears they are asking to consider it. They include it in monthly loan repayments (which is what I do).

    I guess I will have to hunt around a fair bit, wider than I did last time. The Help to but mortgage guarantee may help too in Jan.
  • When I applied to Nationwide, they considered this in our mortgage application.

    To be honest, whilst it may make sense to pay them off (which would give you access to a larger mortgage) it seems you may be stretching yourself a little thinly to get this mortgage and it may not, therefore, be the best thing for you!

    I'm going to pay off my student loans soon as they are an encumbrance and do take a hefty whack of my salary (which could be better spent elsewhere).
  • shonzyd
    shonzyd Posts: 303 Forumite
    i have just completed on a mortgage with nationwide and the student loan did come into question. I was asked to provide a statement. However i only had 1k left to pay and paying about £20pm

    My broker did ask me if it came down to it, could i pay it off if they asked. I was fine with that. But in the end it sorted itself out and i wasnt asked to pay it back. They simply wanted the evidence of much i had left to pay, and how much i was paying per month (visible on pay slips)
    Trainee Building Surveyor


    DIP 12/02/13 - Mortgage application 13/02/13 - Valuation 14/02/13 - Valuation OK 22/02/13 - Mortgage offered 05/03/2013 - Completion 22/03/2013

    FINALLY IN MY FIRST HOME
    !!! WAHOOOOOOO! :beer:

  • I'm going to pay off my student loans soon as they are an encumbrance and do take a hefty whack of my salary (which could be better spent elsewhere).

    I do realise that this is not the point of the post, and that this is your businessm but this logic is mental. Briefly, if you have the £9K available to pay it off, put that in a savings account and earn interest on it. You could even take out the difference between your pre-loan salary and your post-loan salary to spend on yourself and STILL be better off.

    If you don't trust me then please read Martin's article, makes perfect sense. Why give the government money sooner than you need to is my point?
    May'18 DEBT FREE!

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  • shonzyd wrote: »
    i have just completed on a mortgage with nationwide and the student loan did come into question. I was asked to provide a statement. However i only had 1k left to pay and paying about £20pm

    My broker did ask me if it came down to it, could i pay it off if they asked. I was fine with that. But in the end it sorted itself out and i wasnt asked to pay it back. They simply wanted the evidence of much i had left to pay, and how much i was paying per month (visible on pay slips)

    Interesting, I have an appointment with nationwide later today so I will see what they have to say. It's interesting the broker asked would you pay off the loan. I wonder if some lenders want to know the value left on the loan as it effects the mortgage offer differently to another type of loan.
  • When I applied to Nationwide, they considered this in our mortgage application.

    To be honest, whilst it may make sense to pay them off (which would give you access to a larger mortgage) it seems you may be stretching yourself a little thinly to get this mortgage and it may not, therefore, be the best thing for you!

    I'm going to pay off my student loans soon as they are an encumbrance and do take a hefty whack of my salary (which could be better spent elsewhere).

    Hmmm, yeh again similar view to an earlier poster, maybe I am overreaching myself. It's a tough one, wanting to push on and do the most cost efficient thing in the long run (the way I see it at the moment) versus not overreaching and continuing a more 'comfortable' life
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