Student Loan & Mortgage Offer Issue! Help!!

krishna18388

I would really appreciate anyones advice on this...

So i was accepted for a mortgage and have paid for the survey. The underwriter looked at my application again and said that due to my high student loan payment (1st month as permanent employee - previously contracting).

1st month student loan is higher due to a sign on bonus. I explained this to underwriter but they said that they can only go by whats on the pay slip.

Whats the best way to get round this? I really want this house! The survey is booked for end of the month so i have some time to sort this out...

I have about 15k student loan outstanding

Options:
1. Get a credit card and pay off the loan and make minimum payments on the credit card?
2. Pay off a chunk of the loan from some savings - but thats not going to change my monthly student loan outgoings?
3. If i pay 10k off, will they allow me the mortgage on the fact that not much is left on the loan?

Any advice would be helpful. Thanks

kingstreet

Nationwide, I presume?

If you borrow to repay some, or all, of the student loan you are simply going to be asked where the money came from and a loan at commercial terms will probably have a bigger impact on affordability than your student loan.

If you were my client, I'd have suggested putting off the mortgage application until you had a payslip with a lower loan payment on it, or recommended a lender which does not take such payments into account.

You haven't actually said what action the underwriter has taken. Reduced the amount you can borrow?

krishna18388

They have reduced the amount i can borrow. I am about 60k short now!

Surely if i pay it all off and show them proof that its been paid off, it should be ok?

kingstreet

They will ask where the money came from.

Nationwide has a "live" system which picks up new searches and credit accounts during the period between application and completion.

krishna18388

sorry, i should have specified, this is with Yorkshire Building Society not Nationwide.

lovehackney

Surely if you submitted a payslip that had a higher student loan payment on it due to a sign on bonus, the payslip also showed a higher income, that will not be indicative of what you are earning in a usual month?

sorry if I have misunderstood!

Dave_Ham

You are attacking this the wrong way in my opinion. Cancel the application and use a lender that will be less sensitive on the Student Loan issue.

Previous post poignant though, assuming income is higher than ongoing too!

krishna18388

i explained that this was high due to sign on, but as this is my first pay check, they dont have anything else to go by.

Can you let me know which banks dont look at student loans so stringently?

That would be a great help.

Thanks

Dave_Ham

Have a formal chat with a broker. Certainly not able to throw names around...

Some lenders will also have an issue with your length of service..

lovehackney

This still does not make sense.

If your mortgage lender will not lend you enough money on a higher income (based on your one months pay with a sign on bonus), how can they lend you enough based on your regular income?

Yes, student loan repayments are higher the more you earn, but the amount you take home (net, after student loans, tax, NI etc) is still higher than the amount you would take home if you were earning less.

E.g., say you earn £2,000 a month and pay £200 off your student loan. With your sign on bonus, this month maybe you earned £3,000, and your student loan repayment was £300. Overall, you are still better off on the higher salary, and thus should be able to borrow more.

Or are you saying the underwriter is assuming your regular months salary (£2000 in the example above) but your non regular loan repayment (£350 in the example above). In which case, this makes no sense, and from what you have said they are going off your only payslip and so I don't see how this could be the case.