Student Loan and Help To Buy

libf

On the Help To Buy property information form with Orbit for the Midlands you are asked to list your 'Monthly loan/HP payments:' and 'Outstanding credit card balances:'. I understand that this information is used to modify your salary to obtain the maximum 4.5x value for a mortgage.

Do I need to include my student loan under the loan payment section?

Using the Nationwide mortgage tools (which include my student loan) they allow for lending at 4.5x gross salary and the mortgage amount does not total more than 45% of my net income.

lucie_1985

I would assume so, it is a loan which you are obliged to pay and it will reduce the income you have remaining to pay the mortgage

merrydance

Yes unfortunately, another government lie saying it would not affect your pursuit of gaining a mortgage - it does!

lucie_1985

Depends what you mean by lie...I think the assertion was that the increase in tuition fees wouldn't affect the possibility of attaining a mortgage which it doesn't. You can be on a £25k salary with £30k of student debt or the same salary with £10k of student debt and be paying the same monthly sum towards it and it's the monthly payment rather than the balance that's looked at for lending.

libf

I get that it should affect any calculation based on net income, but I was under the impression that the salary multipler was based on gross salary.

Student loan is collected in the same way as income tax and national insurance, but I don't have account for those in working out 4.5X my income...

lucie_1985

It's taken via payroll, as would be a car benefit or medical benefit, along with childcare vouchers etc. which is why they need to see payslips. Presumably tax and NIC have already been built into the affordability calculations based on gross income and if a student loan already was too it would disadvantage those that don't have one

amnblog

lucie_1985 wrote: »

It's taken via payroll, as would be a car benefit or medical benefit

A good reason not to attempt to sweep it under the carpet.

libf

Seems like when Help To Buy South told me that my student loan would not affect my equity loan that they were lying, then...

lucie_1985

If 9% over £17,335 per annum is swinging affordability out of your favour you may well have bigger issues

libf

I can afford the mortgage payments on a loan 4.5x my salary fine, with a 6% deposit. If it's 4.5x my salary - my yearly loan payment then I need a deposit of more like 10% which removes my savings buffer completely. Although I guess I might get a slightly better interest rate at 70% LTV.