Following the Mortgage Market Review in 2014, lenders across the UK have been forced to tighten their lending criteria and delve into applicants’ finances with a fine tooth comb. With lenders analysing the income, spending and overall financial behaviour of everyone who applies for a mortgage, many people worry that their student loan debt will impact their ability to buy a home. So is it true that having student debt can stop you getting a mortgage?
Will lenders know about my student loan debt?
When a lender receives a mortgage application, they’ll carry out a thorough credit check to assess the applicant’s finances. However, your lender is unlikely to find out about your student loan debt during this type of check.
Student loans don’t tend to appear on a person’s credit history like other types of debt do. The only time they do appear on credit reports is if they were taken out before 1998 and the borrower defaulted on a payment.
Although student loan debt is unlikely to show up during a credit search, most lenders will ask potential borrowers to disclose any student loan debt that they have. Give the lender all the information they need because failure to disclose your student loan will catch up with you.
Will student loan debt reflect badly on me?
Student loan debt certainly won’t reflect badly on you. Due to the sheer cost of higher education, most university students require loans to fund their education. And with more people going to university than ever before, lenders expect that most mortgage applicants will have student debts. As a result, having taken out a student loan shouldn’t set you behind anyone else.
Will lenders take my student loan into account when deciding how much to lend me?
Although lenders are unlikely to outright reject you based on your student debt alone, they will factor it into their affordability assessment. They’ll look at how much you repay each month and whether that will affect your ability to meet your mortgage repayments. Thankfully, student loans are repaid in such a way that they’re unlikely to have a significant impact on your finances.
Will other debts prevent me getting a mortgage?
If you have consumer debts such as credit cards, store cards, overdraft charges, and car loans, lenders will take all this into account when assessing your application. If you’ve managed these debts sensibly and have paid them off on time, lenders are much more likely to approve your mortgage application than they are if you have struggled with repayments or defaulted. Some types of consumer debt such as payday loans are likely to be looked at much more negatively and could make it incredibly difficult for you to secure a mortgage.
If you’re concerned about your ability to get a mortgage, please get in touch with our team of mortgage brokers. We have many years of experience helping people to buy their own homes, even if it seems like the odds are stacked against them. Whether you’ve got student debts or consumer debts, we’ll help you find the best mortgage deal for you while saving you time and money in the process.
