Can I use my student loan to help buy a house?

0000Mitch0000

Hi
So i am in a pretty unique situation where i have saved enough money to live while at university and I am getting my tuition fees paid. However i was debating if it would be a good idea to apply for student finance to support me through uni, so i can use the money put aside as a deposit for a house after i graduate. would this be a sound idea? or am better off taking the long road and saving once i graduate and get a job? to give a little context i expect to be earning around £35,000 a few years after graduating. 

grumiofoundation

If you do end up doing this make sure you look at the lifetime ISA. You can deposit up to £4000 per year. Assuming you are eligible this gives you (up to) £1000 bonus from the government. The drawback is there is a penalty if you withdraw the money not for a house purchase (up to 450000) or retirement - so you want to be sure you are going to buy a house in the UK.
https://www.moneysavingexpert.com/savings/lifetime-isas/

In terms of getting the loan - although the interest rate looks high, since there is no guarantee you will ever pay it all back (depends on how much you think your salary will increase) this number can be misleading. 

fred246

I don't quite understand. Who is paying the tuition fees? If you got those paid to yourself instead of uni and took out maximum tuition fees & maintenance loan it would be a lot that you would probably never pay back. Just borrowing a few thousand may just become an expensive loan.

eggandchips7

How can you be certain what you will earn after graduating?

dimbo61

You now pay interest on any student loan from the moment you receive the money.
Have you seen the Interest rate students are now being charged ?
Save up for when you get a job and your career on track.
Shop round for the best student accomodation in your price range

JayRitchie

0000Mitch0000 said:

Hi
So i am in a pretty unique situation where i have saved enough money to live while at university and I am getting my tuition fees paid. However i was debating if it would be a good idea to apply for student finance to support me through uni, so i can use the money put aside as a deposit for a house after i graduate. would this be a sound idea? or am better off taking the long road and saving once i graduate and get a job? to give a little context i expect to be earning around £35,000 a few years after graduating. 

I'm not sure I fully understand. When you say you are getting your tuition fees paid do you mean you are taking the student loan for tuition fees or that someone else is paying for your tuition fees?

In general unless you have reasonable expectations of a very high income its best to take all the student loan you can and bank it where possible if you are in England. The same may not apply so generally under Scottish student finance rules.

JayRitchie

dimbo61 said:

You now pay interest on any student loan from the moment you receive the money.
Have you seen the Interest rate students are now being charged ?

Slight error - you incur a notional interest charge from the moment you receive the money - you don't pay it. Student loans are pretty desirable in their terms and their interest rates. A new grad is way better off using saved student loans to buy a car than to take out a car loan for example.

dimbo61

The poster also hopes to start a careers earning £35,000 once they finish uni so could end up paying the whole student loan and the Interest.
With the current issues around Covid19 and Universities he may not go to Uni this year 

JayRitchie

The poster states "to give a little context i expect to be earning around £35,000 a few years after graduating. " That could well be nursing, teaching or allied health - they are resonably precise about the number. These areas of work would not pay enough (or large enough amounts fast enough) to clear student loans. A graduate starting salary of £35k in something like law or IT would be a different matter.

fred246

You really need to sit down with a calculator to get your head round it. Unless you have a really good salary the 'loan' will just get bigger & bigger. After 30 years it is wiped anyway. So it's reasonable to max out student loans. There is a good chance you will never pay it off. The only 'risk' is that you will have a fantastic salary year after year and then you will pay more. But you will still be 'well off' if you have a fantastic salary year after year.

missile

What do you say to the new graduate? "Burger and chips please"