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!

(PS reposting from Debt-Free Diaries as I think I posted in the wrong place...)

Soundgirlrocks

I would be very wary if it were me. I don't know anything about the Dutch system but I did findThis

Based on their calculations the amount they factor in for your repayments is 450 euro (In reality with the UK system you are probably paying a lot less) I don't know your salary and tax rates ect but have you run the numbers based on the following

Your income less 450 + Your Partners Income + Deposit

If I were you I would look at buying somewhere smaller to start with and overpaying on the mortgage (perhaps the difference between what the Dutch system "think" you pay v what you actually pay) that way you increase your equity in the property and can move up the ladder, very few people start off in the their forever home.

There are three big advantages 1) You keep your financial independence 2) You don't have to live with the inlaws of be beholden to them 3)if you were to split up, you have your share of the equity rather than having paid off the student loan which as you know you may never need to pay back in full, and are in a much better position financially.

Brenster

It sounds a little like entrapment to me ! You could never have a normal relationship with your in laws under these conditions. Especially with having so little to live on you would innevitably end up defaulting on the agreed repayments, which will cause friction. Everytime you go shopping and buy something you will feel guilty, everytime you go out with friend you will feel guilty.
This arrangement will only end badly, i would avoid this like the plague !

SamJ35

Again, don't know about Dutch system. But this proposal seems all very complicated.

So your boyfriend has the affordability potential to borrow 200k on a mortgage and has roughly 30k in savings. Does this mortgage affordability calculation, where your student debt is doubled and taken off your affordability, apply to the joint mortgage? i.e. you have 60k of debt, so 120k comes off affordability and therefore your joint application would only be able to borrow 80k? Or would this be on top of the 200k?

You and your boyfriend could move into a place that you can afford. 200k borrowing, 30k deposit, any savings you have, any affordability you can get. This may mean just him being on the deeds/mortgage. Would you be happy with a situation like that? As your salaries grow, your affordability will too. Then you can move and upsize when necessary. The first house you buy does not necessarily need to be the one you raise a family in.

As you say, with the above arrangement, your total payment would be the full amount of the loan. You may not pay that much at the end of 30 years. So thats something to consider. Do you also want to be in 50,000 worth of debt to your parents-in-law/boyfriend, as apposed to effectively paying a 'tax' for 30 years.

Much to consider. Speak to an independent mortgage intermediary in The Netherlands to assist with this. You may find there are options for mortgages and affordability you have not considered.