Getting a student loan will stop you getting a mortgage!!

agarnett

Eric, Taiko's flippancy may have something to do with the side of the street he or she has operated on, and also because he or she treats this forum as their "patch".

I appalled by the way Taiko, Lokolo and others constantly knock posters who question the Student Loan Scheme, and rush like ants or termites to the site of any threat to the hill.

From posts over years now, you can see that their experience of commerce, economics and politics is so narrow that they cannot even conceive of anything ever happening outside of that covered by an SLC staff operational guidelines manual.

As for agrinall knowitall's contributions - I can't quite get my head around why someone who spends so much time in Scotland where university education is free would be spending so much time on MSE advising non-Scots to stop complaining about the Student Loan Scheme and to suck it up.

Contrast and compare don't seem to be in their vocabulary - and with a blinkered, rose or thistle-tinted view of normality, this forum is next to bloody useless.

kloana

yertiz wrote: »

To resurrect this post, has anyone/ does anyone know of anyone who has applied for a mortgage since the MMR came into force, with a pre 2012 student loan and had problems?
I say pre 2012 as the next lot of students will owe thousands more even tho as already pointed out the actual repayments will be less. When taking out a mortgage a large proportion of students will have the debt for the duration of their loans ...they'll be 50 ish?

http://www.bbc.co.uk/news/education-26954901

I applied for mortgage prior to the MMR, but have a pre-2012 (2003-2006) student loan. It costs me...wait for it...£7 per month in repayments - from gross salary of course.

Anyone who can't 'afford' £7 per month (not that you have any choice over the deductions) should not be applying for a mortgage. Anyone who pays significantly more than me in SL repayments also earns considerably more than me, in turn.

Just due to the very way in which they work, the idea that one would be refused a mortgage (or anything) purely on the basis of their SL repayments is absurd - unless they're already stretching themselves far too thin in terms of the repayments on the mortgage they desire...people who would already be refused under MMR rules before their SL even comes into question.

There's a million things you can do to shave a few quid off your on-paper outgoings before the SL becomes a 'make or break' factor. I've never heard of anyone's SL payments 'breaking' them - save for those old-style ones (pre-1998, I think?).

Lokolo

agarnett wrote: »

I appalled by the way Taiko, Lokolo and others constantly knock posters who question the Student Loan Scheme, and rush like ants or termites to the site of any threat to the hill.

There was no question to knock. Only a statement that was completely wrong, and that I have put right.

And Taiko is a he.

I have never had anything to do with SLC, however, from these forums I have learned a great deal about finance and such I feel as though I can make these comments.

What do you disagree with in my post?

agarnett

Lokolo wrote: »

There was no question to knock. Only a statement that was completely wrong, and that I have put right.

And Taiko is a he.

I have never had anything to do with SLC, however, from these forums I have learned a great deal about finance and such I feel as though I can make these comments.

What do you disagree with in my post?

OK, let's take a closer look at your post:

Having a student loan will not stop you getting a mortgage.

That is a very sweeping statement potentially and typically covering a 30 year future time period, but a statement which includes no qualifiers whatsoever. Do you have crystal balls?

However repayments, as with any loan, will have an impact on the amount you can borrow (from affordability checks).

If your first statement is true, then why are you back-pedalling with this second statement? I calculated long ago that my son may owe SLC almost 6 figures before he graduates in three more years. That's a loan bigger than my mortgage. At RPI +3% (a rate currently 4x my mortgage rate) do you really imagine that will remain insignificant to lenders of the future, especially if the loans are privatised?

Loan capital won't make a difference to a mortgage application, the repayment amounts do. For example, someone with a £50k loan paying back £100 a month will have the same affordability with a £20k loan paying back £100 a month.

Again, a very sweeping and might I say simplistic and not very clever statement for a long future period, again with no qualifiers.

This is no news, student loans have been available over a decade and this has been the situation since they have been available!

Untrue. The situation is changing all the time. Take a long hard look at the Erudio thread to see what kind of disgusting exploitative mess can be created by people who make sweeping political statements with no qualifiers beyond the ends of their noses - noses that seem unusually indifferent to distinguishing bad smells when they arise too.

Lokolo

agarnett wrote: »

OK, let's take a closer look at your post:That is a very sweeping statement potentially and typically covering a 30 year future time period, but a statement which includes no qualifiers whatsoever. Do you have crystal balls?

What? So we should consider every single possibility that could happen before making statements? No we shouldn't.

My answer is based on what we know is true today, not made up stuff that could possibly happen in 5, 10 or 100 years.

agarnett wrote: »

If your first statement is true, then why are you back-pedalling with this second statement? I calculated long ago that my son may owe SLC almost 6 figures before he graduates in three more years. That's a loan bigger than my mortgage. At RPI +3% (a rate currently 4x my mortgage rate) do you really imagine that will remain insignificant to lenders of the future, especially if the loans are privatised?Again, a very sweeping and might I say simplistic and not very clever statement for a long future period, again with no qualifiers.

Why are you looking at ifs and buts? It is the situation now that counts.

I have a student loan with a balance of approximately £15k. I have a mortgage. My affordability was taken into account by some mortgage companies based on the repayment, not the capital amount.

This is the same as any commercial loan. When you go through affordability checks (which I have done with a mortgage broker), they ask you what your outgoings are, not the amount. With credit cards though there usually is a correlation between the amount total owed, and the amount you pay back (due to minimum payment calculation). Therefore the capital amount on a credit card could indirectly effect your affordability. This is not the same as student loans.

Why are you just making stuff up that could happen in the future and using that as an argument? It's completely invalid. The government could decide tomorrow to wipe everyone's student loans debts as well, but you know what, I haven't even mentioned that as a possibility.

You mention I haven't used any qualifiers where as you are just making stuff up!

Untrue. The situation is changing all the time. Take a long hard look at the Erudio thread to see what kind of disgusting exploitative mess can be created by people who make sweeping political statements with no qualifiers beyond the ends of their noses - noses that seem unusually indifferent to distinguishing bad smells when they arise too.

Pathetic comment.

agarnett

Lokolo, remind us please - you left university when? Who do you think you are? Why do you feel qualified to comment on any of this stuff in such strong and dismissive terms?

You live for today but you advise impressionable students on matters that affect futures that are longer even than the number of years you have lived?

And you have not even remotely experienced the kind of loan deals which the growing majority of current undergraduates are suffering ?

I have made nothing up. I have simply seen financial and education climates, relevant law and government tendencies change several times since you were in nappies. You only know what you have learned, and I don't think you have lived long enough nor read nor studied widely enough for that to amount to enough to assert what you have just asserted.

I don't think you have any idea how skewed the lending market has become nor how often it has become skewed in so many different ways in the past. When Martin Lewis started this site, it was easier to borrow a quarter of a million on credit cards as an unemployed person than it was to see a man about a mortgage. What did that have to do with affordability? Oh, sorry, you can't answer that, can you? You were in short trousers and weren't aware of such illogical practices being launched on to an unsuspecting market by people, some of whom are still employed in the lending industry.

You were however aware when the likes of Wonga entered the market. Maybe you knew people who borrowed from Wonga. Maybe you did too? What had affordability to do with what happened there?

And Erudio? What have you to say about what is going on there?

And you even suggest that your own affordability has been tested against what you must repay under your mortgage! Have you a 30 year fixed rate deal of the type that is typical in Europe? You must have if you believe your own guff on that. Have you ever experienced double figure mortgage interest rates? How many graduates with heavy five-figure and six figure student loans are going to be given new mortgages if that happens again?

Do you even know when mortgages were last in single figures, let alone as cheap as chips? Do you honestly think your now is the real barometer of the rest of your borrowing life?

You Sir, have a bloody cheek to use words like pathetic.

Lokolo

agarnett wrote: »

How many graduates with heavy five-figure and six figure student loans are going to be given new mortgages if that happens again?

Again, if you can explain to me when loan capital is taken into consideration I would be grateful.

At no point have you proven that 6 figure student loan debt will be considered when getting a mortgage.

I advise based on what is in todays climate. As anyone should. There are infinite number of possibilities that could effect us in every single way. But these cannot all be listed out in every single response.

Those asking questions in the Mortgage area of this forum, do the responses all contain about double digit interest rates? How about falling housing prices causing borrowers to go into negative equity? Not everything can be considered, and therefore my reponses are limited to what we know today.

My age doesn't really matter if I have the knowledge to respond and answer questions. You have yet to answer my question re. loan capital and mortgages. I do notice you have a habit of arguing with experienced members of this forum who have a great deal of knowledge (even on Christmas day!), and yet you yourself do not part any of your knowledge to others in your 120 odd posts, by contributing to questions posted on this forum. Perhaps you should do that instead of arguing.

ericctheking

Lokolo, why do you just reply when being asked about Erudio saying it is a "pathetic comment"?

Have you read the Erudio student loans thread?

Do you not see how the privatisation of student loans is a terrible thing. David Willets said that selling student loans to a vulture debt collecting agency would not see ex students seeing any changes! Clearly a lie.
Why are people so blasee about this? Have you heard of project hero by Goldman sachs?
The plan is to sell off the whole student loan book and try and change the terms and conditions!
Did you know in the terms and conditions you signed for your loan there is a clause that lets the terms and conditions be changed anytime?
This is a consideration for anyone thinking of taking out these loans.

Why don't you express your opinion on Erudio? and the future selling off of the loans to Wonga like companies?

Lokolo

ericctheking wrote: »

Lokolo, why do you just reply when being asked about Erudio saying it is a "pathetic comment"?

Have you read the Erudio student loans thread?

Do you not see how the privatisation of student loans is a terrible thing. David Willets said that selling student loans to a vulture debt collecting agency would not see ex students seeing any changes! Clearly a lie.
Why are people so blasee about this? Have you heard of project hero by Goldman sachs?
The plan is to sell off the whole student loan book and try and change the terms and conditions!
Did you know in the terms and conditions you signed for your loan there is a clause that lets the terms and conditions be changed anytime?
This is a consideration for anyone thinking of taking out these loans.

Why don't you express your opinion on Erudio? and the future selling off of the loans to Wonga like companies?

Don't get me wrong, I am against Erudio and the selling off of student loans. I am also against the high interest rate of post 2012 loans (I think the post 1998 to pre 2012 loan rates are 'perfect')

However I don't see the Erudio having an effect on the fact that it is repayments having an impact on affordability. Not the capital amount which is not considered. As I have said in multiple posts, I am posting purely on what it is today, not what could happen, which is exactly what this thread has turned into!

I never mentioned anything that was irrelevant to students loans and impacts on mortgages. You and agarnett have. If you want to say anything against my original statement, then please say so and have some proof. I am an open person!

This is going to be my last post on this thread. I have given the facts in my opening post and they are currently true. I have no reason to argue for/against student loan book sell off or anything else thats unrelated.

agarnett

I hate the guerrilla style of posting when questions posed to those with restricted agendas get awkward for them to field - so they shoot a few last wild shots, then run and hide. Or is it just a kind of "you're on my pitch and I'm taking my ball elsewhere until you've gone"?

I wonder how much mortgage and affordability experience young Lokolo really has? At his or her age, it mattered to me what my parents said about mortgages and what my in laws said. Both sets represented the first in their families to own property. One set was scared to death by their mortgage which was started in the 70s when I was a teenager. By the 90s they had paid it off, all £3,300 of it, and they still live in the same house, mortgage free.

The other set were mortgage free before age 50, but one had to die to achieve that status but even managed a house-move in the last months of terminal illness and secured more guaranteed life assurance in the process (yes the industry did such things!).

The in-laws had started with a local authority mortgage in the 60s. Their initial interest rate was single figures - about 7% I think. By the time I got my first mortgage in the 80s, RPI had just peaked at 21.9%. I got annual pay rises which included "cost of living increases" in double figure percentages and then merit and promotion increases on top. We still had fairly strong trades unions who collectively bargained for large groups of workers so that it was possible to broadly keep pace with inflation. That's a protection of the past.

So before we got our first mortgage, 7% was the lowest unsubsidised mortgage rate we had ever heard of in 20 years. It was just a dinosaur rate from a previous age (or so we thought). Mortgage rates were all over the place. I remember one fixed deal at 11.3% for two or three years. I did ok with it! Then I lost out on another fixed deal another day. We never ever expected to see single figure mortgage rates ever. No-one did. My father-in-law still counselled that we should borrow as much as a mortgage lender was willing to lend and not worry about how we would pay it back. That would take care of itself. In a way it did, because in his day, the lender didn't lend more than 3x the male salary, and the lender insisted on insurances and assignment of any collateral such as endowment policies or even pension policies so that there was always something to pay the loan off at the end.

By the 1980s we were getting multiples that took account of female salaries - well maybe 3x male plus 1.5x female. But 100% mortgages were readily available. Then eventually someone said the multiples were a bit sexist so we got 4.5x joint salary type multiples, then 5x and 6x. We also got lower and lower cost endowments, and low start endowments which became like paper bags of hot air. With profits got nudged aside by "unit-linked" endowment policies. Then !!!!!! ... endowments rapidly, despite two decades of excellent and easily understandable use, became some kind of apparently scuttled pariah product, and the great hulks of with profits funds were in fact not sunk, but deliberately beached, but not in Bangladesh to be dismantled by opportunistic scavengers, but in London by outfits with names like Resolution, now rather quaintly branded "Friends", which is actually the last thing they are to most punters.

Also however, in the mid 80s, it suddenly dawned on those bright sparks in the city that debt was good. The bigger the better. Debt was risk. Risk could be traded. Risk could also be dumped on people not just corporates. How to control more debt? How to get a big slice of more personal debt? Car loans perhaps? Nah that's not enough. Wait! I know! Mortgages ! We already know about them. Let's buy up estate agents and their in-house mortgage brokerages! Then we can dish out and control the biggest personal debts of all! Yes Mortgages! Why didn't we think of it before? And so they did. Insurance companies paid huge premiums and bought out and created enormous chains of national estate agents. Even supermarkets had a sniff at it if I remember correctly!

In September 1992, I was on holiday in Canada when Chancellor Norman Lamont stepped into the limelight, brushed that long lock of hair from his forehead, and told the world he'd taken us out of the ERM. What was the ERM? Who really cares? But it caused mayhem in the markets. I had bought dollars at two for a pound before my holiday, but the pound plunged after he said his piece. A bit peeved, but not overly perturbed, I plunged too - before heading back to Blighty, I went scuba-diving in Bermuda despite my dollars costing a bit more than expected. You see I was doing better than average but of course many others were doing diabolically and falling into doubly depressing negative equity traps.

Meanwhile self-certified mortgages somehow became the rage, and interest only mortgages - these were tools that allowed many people to lie their way out of trouble - the lenders didn't seem to want to know about assigned collateral and insurances any more - it was kind of okayed by the government - a bit like PPI reclaiming. A kind of quantitative easing for the people ... but actually it created what we might now call sub-prime - never imagining that we or anyone we know might be it.

Then by the noughties, nutters like Northern Rock were offering 125% LTV. That's because the lenders had started doing serious book-cooking too - because they could. The global insurance companies and their investment banker friends showed them how. Never mind estate agents any more - think bigger picture. Start packaging all those existing mortgages into derivative products and issuing insurance policies on their continued performance.

My first five mortgages (yes I know a bit about them, Lokolo) were with profits endowment mortgages. I had bought a house 4 days before Christmas in 1987 having found, exchanged and completed inside 3 weeks. Yes Christmas Day is just a day in the calendar, Lokolo, except I found time to both travel and cook a decent Christmas 2014 lunch for rellies despite frankly, your rather unnecessary attempt at ridicule just because you detected I had chosen to find a few minutes to post on MSE that day too).

You may have noted above that I said mine were with profits endowment mortgages. That's because they were the norm. Those are of course now four very very dirty words indeed, and most surviving industry people dismiss that scandal as nothing to do with them. But the scandal was a big deal and continues to be so for hundreds of thousands of people who were young and impressionable once, just like you! Some of those people are the same ones who struggled in the negative equity traps and house price crash in the late 80s early 90s.

Some of them lost again with the price crashes after 2007. Triple whammies. But never mind, many bailed themselves out as usual with massive credit card limits that had miraculously appeared in the late 90s and noughties. Remember those old American movies where they open their concertina wallets and out comes a huge ribbon of credit cards? Yep UK followed suit. But guess what? Student Loan Debt in the US is now significantly greater than Credit Card Debt.

And I know from personal experience that I can borrow more on my credit cards than I can on my mortgage. If I was a Repayment Plan 2 student I would also know that I could borrow more on my Student Loan before I graduated than on my credit cards or my mortgage! What? How can that be ?

It's a crazy upside-down world of debt, Lokolo. And when you say you've been affordability checked for a mortgage - like you have some meaningful hard-earned or maybe easily earned (depending on what you are trying to say) seal of approval - all it really means is that you have been suckered into someone else's game where you probably still do not even begin to appreciate the extent of your true lack of control of your own destiny, or at the very least, your luck that your Student Loan debt is rather insignificant compared to the Repayment Plan 2 debts increasing at RPI + 3% as we speak.

When Student Loan Debt in the UK exceeds Credit Card Debt - as it will, quite quickly now at those rates of interest, which type of debt do you think will be securitised/bought and sold the most? Will it be mortgage debt? Will it be credit card debt? Will it be student debt? Will it be mortgage debt taken out by students who also have massive student debts - would the latter be sub-prime debt or super-prime do you think ? Are you buying or selling?

Which would you trade, and what kind of discounts would you expect if you were an Erudio? And how would you turn a quick profit?


Yet you still wish to base your recommendation of affordability on your own particular experience of "now"?

I really urge that you might need to experience a few more decades before you get the trick of it sufficiently to preach to youngsters that the Student Loan millstones round their necks will never be a problem.

I have more than one credit card limit higher than your own example of a student loan - a loan which in your case represents better days for students when student loans were nowhere near as onerous as now. Does your rather modest older style student debt really qualify you to make sweeping statements about the current styles of loans affecting the majority of undergraduates who started in 2013, 2014 and who right now are planning to start in 2015? Have a heart, Lokolo.

You actually have no more clue than anyone else how much a typical SLC Repayment Plan 2 loan is going to affect their chances of getting a mortgage in the future, because you have no clue what interest rates and salaries will be doing in 12 months let alone 2 3 4 or 5 years down the line, nor indeed how fast the government of the day will actually need to privatise the loan books. Nor do you have any idea what will become of the mortgage market, the regulatory pressures applied to it, or the housing market. Why are you even countenancing investment in the UK in the housing market? Because it IS a good idea? Or because in 10 years you might be able to say "well everybody does it/it seemed to be a good idea at the time" - like Student Loans perhaps??

The UK economy is surely teetering backwards and forwards over massive precipices of unknown depth. You might take heart in knowing that if we go over, we'll take others with us, but really, why are you still effectively countenancing that Student Loan Debt is like safe sex? You surely know that there are always winners and losers whatever the markets do. Do you really have enough knowledge to argue that the debtors will continue to be the winners? Prisons used to be full of debtors. Bankrupts are still treated as third class citizens. But some debt is good debt? Could be. But you better be bloody nimble on your feet with it.


Students should never have been made to borrow money to continue their education in laudable ways. To have done so was a cheap time and distance trick learned by gullible politicians from financial centres like London and New York. Learned from such practices as the miraculous bailing out Lloyd's of London using Equitas and outsourced "run-off" structures, when Lloyd's was actually bankrupt. Learned to from phoenix-like re-incarnations of too big to fail zombie airlines via Chapter 11 type administration in the States. And most recently learned from the absolutely blatant printing of vast quantities of fiat money paper right around the world. I.e. our Student Loan scheme is now something based on the same "never never" as feared by our wisest grandparents. The time and distance aspects have been achieved most assuredly by real risk transfer (away from current taxpayers and government) played on and placed upon our nation's most impressionable young adults, those who have a thirst for learning and who are constantly advised there is only one way to get it.

These youngsters are those whom we should actually be nurturing like budding supermen and women in superb protective capsules with excellent life support systems, not treating them as cannon fodder for the likes of Erudio and God knows who else in a few years.