Mortgage Application Issue

missionfella

Hi everybody

I'm a regular lurker and user on MSE and often come here for advice but I can't find my current problem

I want to apply for a mortgage (maybe using the Help to Buy scheme) and have been saving up for a while. Stupidly, I never paid back my student loans, through a combination of moving house a few times and head in the sand attitude. I have been in a position to pay them off or arrange the minimum payments for a few years now but haven't done so because I wanted to get a good savings behind me and because I'm worried that it will affect my credit. the debt is around £10,000. I have been receiving my statements from the SLC but also some debt collection notices which I haven't called up about because I really didn't know the best course of action to take. I know it seems very stupid, but I really do want to settle the debt. but without it affecting my score.

Currently these defaults do not show up on my reports (Experian and Equifax) and I don't want them to for obvious reasons. I want to pay them off but don't want them then to show up on my credit report. Ideally I'd be able to pay them off and/or arrange to pay monthly before I apply for a mortgage but I don't know if that means they will adversely affect my credit by becoming visible.

The alternative would be to get the mortgage and then satisfy the debt but even though they're not showing up on my reports will they show up when the lender searches?

I realise that I probably should have sorted it out as soon as i could butI made the decision to not affect my credit score, rightly or wrongly. I do have enough to pay off my debt and for a 10% deposit.

Is there anybody who knows how Student Loans and credit reports work able to help?

Thanks

missionfella

I should add that I'm not trying to get a mortgage without paying my debts but I just need some advice on the way to do it without getting a mark on my report which might last years.

hanvyj

I thought student loan debt just came straight out of your income? Generally it comes under a "good debt" (as far as debt can be good) and lenders aren't so concerned about it. You have to be earning a decent sum for it to impact your take-home, in which case you are earning enough not to worry about.

ch3101

missionfella wrote: »

I want to pay them off but don't want them then to show up on my credit report.

From what you've said about debt collection agencies I'd asume that you have defaulted. You can't default on a debt and expect it not to show as a default.

missionfella

ch3101 wrote: »

From what you've said about debt collection agencies I'd asume that you have defaulted. You can't default on a debt and expect it not to show as a default.

It's not showing though which makes me think there are different rules to student loans. I don't know. As I say, I also get statements from the SL company.

missionfella

hanvyj wrote: »

I thought student loan debt just came straight out of your income? Generally it comes under a "good debt" (as far as debt can be good) and lenders aren't so concerned about it. You have to be earning a decent sum for it to impact your take-home, in which case you are earning enough not to worry about.

No, it never got taken out of my wage and I stupidly never checked on it until it was too late.

The main worry is will I incur bad credit by paying it before I apply for a mortgage?

missionfella

Anybody have any advice on this please? I know it's a strange one...

ethank

What year did you take out your Student Loans?

missionfella

ethank wrote: »

what year did you take out your student loans?

1994
1997
1998
1999

ethank

Hi. Repayments on loans issued before 1998 are not collected by HMRC so you have to pay them to Student Loans Company direct by direct debit and they are known as fixed-term repayments.

Some info is also at http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3867002&_dad=portal&_schema=PORTAL

missionfella

Hi everybody. If anybody has any guidance on this i'd be very grateful. Here's the problem:

I have almost £4000 in debt owing to a debt collection agency for unpaid student loans. I also have just over £4000 owing to the SLC. I'm in a position to pay these and I want a mortgage. I'd like to make an offer to the debt collection agency and pay the SLC monthly but I don't want it to show on my credit reports.

My question is, can i pay the debt without it showing up on my credit report and if it does will that ruin my chances of getting a mortgage completely? Or should i try to get a mortgage and settle the debt afterwards. Nothing is showing on my report at the moment.

Thank you.