Mortgage offer says we have to pay off student loan now!

tea_pot

Just a bit of back story!
First time buyers, both on £30,000, partner been employed for 2+ years (software engineer) and I am starting as a Junior Doctor next week.

Had a few problems as I havent started work and my contract states 1 year, although its a national programme and we are guaranteed employment for 2 years, letter from hospital confirming this.

Used a broker (was getting complicated), who got us a mortgage with nationwide. House £172,000, 10% deposit.

Solicitor just emailed to say that they have recieved our formal mortgage offer and a condiiton of it is that we repay our student loans before completion.

The offer approximated this amount to be £18,700. My loan is approx £14,000, and my partners was approx £21,000, although he has been automatically paying this back over the past 2 years, but with interest it is likely to still be more than £19,000.

Our solicitors have never seen a condition like this before.
We fully disclosed our loans to the bank, and they agreed to our MIP etc.. without ever mentioning that we would have to repay our student loans. We have no other debt and both have good credit ratings.

Has anyone ever come across this before? And does anyone have any advice?

We spoke to our broker who is emailing the bank, but like us, knew nothing of this until now.

Obviously we can't just produce that amount of money out of thin air and now at a bit of a loss!

Thanks for reading!

ACG

Speak to your broker, get him to check with nationwide. He may have keyed it in wrong?

girlcalledpanda

Ours came back with that condition too, I was also annoyed as we'd disclosed the loan upfront and its on payslips. We have a car loan which we'll pay instead though as I really can't see the point of paying the student loan off in one lump sum, we gave net monthly pay as well as gross annual so surely they should take affordability based on the net pay? Is this a new thing that's happening? I presumed our broker had made a mistake too!

Funny_old_game

£18700 debt to be repaid as a condition, I'd be worrying. The only thing thats happened here is your broker has ticked it'll be repaid before you complete.

In reality if it wont, the lender will reassess and it will affect the amount you can borrow. Your solicitor wont budge now that they know as they will be responsible should it go belly up in the future.

How much dud the say they would lend you in total assuming these loans were repaid? If a figure like £250k you may be ok. It'll all depend in the payments you are making.

Don't want to scare you but I would get into this and sort it out before you get too far into the process.

Jaybo10

Yes I had to pay mine off, luckily for us that was only about £1k. We disclosed the student loan upfront but I think it was because we were doing a high ltv and were at the top of our lending limit.

Gentoo365

If you find yourself in financial hardship you should complain that they advised you to pay off a debt that offers a reprieve if your income drops and replaced it with mortgage debt that does not.

kingstreet

If the student loan payments were entered into the affordability calculator and the amount required could still be achieved, there would be no reason for the advisor to enter the commitment was to be repaid.

So, the first question is did the advisor note it to be repaid, or simply forget to include it because he didn't check the payslips or didn't have the payslips because the OP doesn't yet have any?

If the advisor didn't note it as to be repaid, he would have had a conversation with Nationwide where they told him they wanted it repaid and he agreed with that.

Ask advisor for copy of application form so you can see which way it was set up.

The final question is, will Nationwide still lend the amount required without the commitment being repaid?

Annisele

Gentoo365 wrote: »

If you find yourself in financial hardship you should complain that they advised you to pay off a debt that offers a reprieve if your income drops and replaced it with mortgage debt that does not.

That would not fly. The lender didn't advise the OP to pay anything off - it just said that it wouldn't lend him any money if he didn't. Not the same thing at all!

Gentoo365

Yes but the whole process is now advisory.

smifffy1989

It is annoying that the goalpost's have changed on student loans. I went to uni on the advice that the loan never makes a difference to obtaining credit in the future and mortgages do not consider them.

kingstreet

smifffy1989 wrote: »

It is annoying that the goalpost's have changed on student loans. I went to uni on the advice that the loan never makes a difference to obtaining credit in the future and mortgages do not consider them.

The Financial Conduct Authority decided lenders had to be much more responsible around affordability.

Many lenders already took them into account when calculating affordability and MMR means the others have now fallen into line.

If you are making payments, I can see no reason why they should have been excluded in the first place, as payment is income-related.