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To buy or not to buy....a 26 year olds question!!!
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As long as you are earning over £15k, you have to pay towards your student loan at a rate of 9% of earnings above £15k. If you have not paid off the sum plus interest by the time you reach 60 (or 25 years after graduation for new graduates, I believe), the debt is written off by the government. It's just the way it works. Of course it is possible to pay it off early, but it is not advisable, even if the interest rate does rise to 4.8% for one year (from Sept 2007). The argument is that a person who has a degree will earn enough over the course of his/her working life to pay off any loan taken, and it is important to the government to make sure that its citizens have access to a good education - and even if they have to spend money towards it, overall it is a good investment for them in the long run.
To the OP - Personally, my vote goes towards saving, saving, saving, building up a deposit, and then buying, minimising the amount you have to borrow as a result. It is better to have a deposit and a student loan than to add the equivalent amount to a mortgage. If you are fed up of living at home, why not consider a houseshare? If it makes you happier for the short term by getting you out of your parents' house (while enabling you to continue saving a decent chunk of money) it would be worth it.
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Thanks again for all the ongoing input....most of which reflects what I already thought....
Re student loan - if I haven't paid it off by the time I'm 60 then my career will have taken a significant nose-dive; so hopefully that isn't an issue!
Appreciate everyone's comments about 100% mortgages being on much higher rates, but i have to say that when I have looked into it, as a (quite recent) graduate I have been offered the standard rate. This has been the case with HSBC and Northern Rock, anyway - who probably aren't the best examples!
Even with an 'average' interest rate payable - I still have my doubts about taking on a mortgage at 100% LTV or using my parents money - mainly because of doubts about the housing market.0
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