Effect of Student Loan on Mortgage Offer?

speed12

Hi,

First post here, although have been thankful for the wealth of knowledge on these forums through my first property purchase.

Situation is:

Looking to buy a property for £159k
Have had a MIP for £135k and so proceeded with that
All documentation etc has gone in and through underwriters

Had a call from my mortgage advisor today that the BS have lowered their offer to £129.5k because of my student loan.

Now, normally, that would make sense had it not been declared earlier in the process, BUT a) it has been declared the whole way through and, more importantly, b) the original MIP was set using my NET income for the affordability assessment. The reason for this is that I have a salary sacrifice car which caused some confusion with lenders when my gross salary was used for the affordability - so my mortgage advisor did it again using the NET to avoid any confusion - that was the amount that I was getting paid each month, that is what I would have to work with (whilst obviously still disclosing full payslips, car scheme amount, etc to the lender).

Which is where the confusion comes in - if the MIP was based on NET income then it means that the student loan was accounted for. But now they have lowered the offer by £6k because of that same student loan - which sounds very much like it is being double accounted for?

I have asked the mortgage advisor to check this as it does seem like a mistake, but wanted to know if there is anything else specifically with student loans which would cause this drop in offer?

BS is Leeds in case that makes any difference.

Many thanks in advance for your help,

stephenni1971

People tend to forget that they have an Agreement IN PRINCIPLE.

The IN PRINCIPLE bit means that it is not guaranteed - and subject to review once all the relevant details are provided with the application.

It is definitely worth checking on the NET/GROSS query you mention - they may have made a mistake however they may well have revised the offer based on other information you may have provided.

speed12

Thanks for your reply, appreciated.

Your absolutely right about the "in principle" bit - it's not the fact it has been reduced, but the reason I have been given for it that has me confused. If there is a completely valid reason then I would accept it, but I cant work out in my head why this would be one (although am no expert by a LONG way!)

kingstreet

Many lenders ignored student loan payments upto a few weeks ago.

Under the MMR regime which starts officially this weekend, such loans and things like childcare, ground rent & service charges, maintenance etc will be taken into account, reducing what you can borrow.

Hence the "then and now" difference.

Leeds DIPs are not based on net income and never have been. However, you did not have to enter student loans previously and you do now, as above.

giblet1979

Hi,
Back in Nov/Dec, the same thing happened to a friend of mine - he was agreed in principle, but then rejected on the basis of his student loan payment. It actually turned out that the loan had finished, and he hadn't realised, so he got £400 back and the mortgage company reconsidered, but I have therefore heard of it happening prior to the new changes.
Hope it works out ok for you, and I'd definitely check the Gross/NET thing because that could make all the difference.
Gib x