Should I pay my student loan in full with help from parents-in-law? Mortgage abroad difficulties...

teresa94

Hello all,

This is my first post, and I've been motivated to come here to get my thoughts out and have some guidance from strangers with some distance from the situation.

Some background: I've been with my Dutch boyfriend for 5 years, who I met in my second year of university in England. My student debt was always something I shrugged off, following advice to think of it as a graduate contribution as it would not really impact my life. With interest, it now totals 60,000 euros.

However, my partner and I have now decided that we may well settle in the Netherlands. He's in a position to buy a house, which would be much cheaper per month than renting. However, he's where the knife twists, in Holland (and maybe many other countries like Belgium where we could live in the future), your student debt is doubled and then taken off the amount you can borrow for a mortgage. This means that we would never be able to buy a house together, and he can only loan around 200,000 on his own, which isn't ideal as we get older and want more space for children and so on.

So, his mother (who sorts out everyone's financial problems in the family) came up with the idea that she would lend me 30,000 euros, and my partner would put the same amount (almost all his savings) into paying off my loan. We would then live with them for 2 years or so, with almost all of my salary going to paying back my parents-in-law (1500 euros a month - I earn 1850 and pay 250 in travel costs to work). My partner would basically pay for food and I would keep my 3000 euros of savings for trips to visit family and so on.

My boyfriend and I would make a 'living together' contact stipulating that I pay him 300 euros a month or so until I pay him back, which he says we can just ignore but have as a safety net for in case we break up. Neither of us imagines that happening, but it would make us both feel more comfortable to have it there and take away any awkwardness.

Being uncomfortable and feeling like a huge financial burden is something that's a big problem for me here. My boyfriend was lucky enough to have a well-off family and so he has saving and no study debt, and so he's quite happy to help me out and build up our savings again without what he sees as a huge debt hanging over us. I'm used to thinking of it not as a debt at all, but as a tax. And I don't like the idea of losing my financial independence.

Also, in this way I will pay back 50,000 pounds and if I just stick to my monthly payments it will probably be around 30,000 in my lifetime, as it's written off after 30 years. So it's really only important for buying a house, which I never saw myself doing so young. It's a generous and great opportunity to rid myself of debt, but I can't seem to reconcile myself to it. And more worthwhile if I end up a high-earner, as I hope to one day!

So I'm posting here and will be really glad to hear your thoughts.

Thanks in advance!

Silver_Queen

I think that this is a deeply personal decision that only you can make, depending on your circumstances.

However, if you gave me the choice, I would not take it. Your financial life will be heavily entangled with your boyfriend's and boyfriend's family after you make this decision. Only you can decide if you're comfortable with that but I wouldn't like to because it would take away my financial independence.

You say you plan to pay them back 1,500 euros a month, your travel expenses are 250 euro per month leaving you with 100 euro per month. If your username is accurate and you're 24/25, that's not very much money for you to live on every month, if you have a social life. Are you essentially signing yourself up to having no money to see friends, making you isolated and potentially even more reliant on your boyfriend?

ohdearhowdidthathappen

Personally, I'm not sure I would do it, to be honest. You're committing your finances very tightly to your boyfriend and his family and losing a lot of independence.

Are you definite that a Dutch bank would care about an English student debt, do you actually HAVE to declare it all? I know nothing about student loans (my degree was an NHS funded one), but my understanding is it gets deducted once you start earning over a certain threshold, does that happen out of a Dutch salary?

If you definitely can't buy together, I'd rent or let him buy what he can afford on his own... gives you a few years to check you want to settle in the Netherlands and you can save in the meantime too. If you get married and/or have children in the future, you could reassess then.

JohnJ76

Wow, this is a bit different to the normal diaries one reads on here. It is a very hard one to comment on as it mixes head and heart, two things which shouldn't really mix when making financial decisions but I have to agree with couple of the other posts. You say it would be much cheaper to buy than to rent, but renting would give you some breathing space and is there a real rush to buy a house? Would you not consider him buying a house and then you can use your salary to overpay the mortgage and then in a few years, assuming you are still together if you want to upsize you will have lots of equity and if the UK has finally exited the EU you can scrub your debt :-) Or if his mum wants to lend anyone money to buy a house, lend it to her son so he can afford a bigger place. Then if you split and he needs to sell, at least he can pay back the capital to her. I'm not doubting your relationship but with all the contracts in the world, if there is an acrimonious split at any point in time enforcing them can be very difficult (I'm not saying you would be the one leaving him, it could be the other way around). I'm sure there are plenty of people who will call me cynical, I'm not I'm nearly 10yrs happily married, but you are committing to living with the in laws (which can test patience in the extreme) having a disposable income of £100 a month (will you really be happy with this?) and feel a huge debt to MIL come what may. What if you lost your job, wanted to move to the UK, have kids etc

My dear old nan (whom I should have listened too more!) was a money saving icon and said never borrow from, or lend to, friends or family. There is also a saying ''When borrowing money from a friend, decide which one you need the most'' I hate to say it but family (emotion) + money (logic) often = mess.

I wish you luck in whatever you do - keep us posted!

teresa94

Hi all,

Thanks so much for taking the time to think this over and make thoughtful replies - it's really helpful just to see the situation from an outsider's perspective.

My initial reaction was also that mixing money and love/friendship is NOT a good idea, but was kind of brought around by his Mum's approach of seeing it as our problem to solve together, kind of like a married couple with a joint income.

Having been a student until very recently, I'm quite used to living cheaply, but had been enjoying having a decent salary every month... It's also just a very tempting offer, to stop the debt now before it grows and grows. I can't help but feel like a spoiled millennial at my disappointment of giving up the trips abroad/cars etc that my peers in England are enjoying! And still not sure I want to burden my boyfriend with this responsibility.

In the end, with your help and having thought it over, I think I will go ahead and find a mortgage/financial advisor with some experience working with expats who can give me the real facts on this and work out the alternatives with me. If we do decide to go for it, it will mean a couple of years of living with his parents and on a tight budget.

We have until September until interest is applied again, so will seek out professional advice and keep you posted on what I learn!

Thanks again for your help

Hillwalker11

Definitely get a broker/FA with ex pat experience. Normally the SL is taken monthly by DD if abroad. It is not deducted from source like in the UK.
My son lives and works in Hong Kong and when he wanted to get a mortgage in England for a buy to let the biggest problem he had was finding a lender who would accommodate him. The circumstances are very different but an ex pat financial advisor will be able to give you some advice on the way forward.

Personally I would not borrow from boyfriend's mother. I can understand the temptation but no-one knows what the future holds. Not wanting to put a dampener on things but if in the future you broke up you would find yourself in a very tricky situation.