With an increase in university fees, more and more people are being forced to take up student loans. These loans are expensive, and it might take you years to finish paying them off. If you are thinking about buying a house but still have student debt, here are a few things you should know.
Do student loans affect a mortgage application?
Yes. Although student loans don’t appear on your credit file, lenders will take it into consideration when deciding whether they should approve your request or not. A mortgage broker can be very resourceful in ensuring that your application is approved, so take advantage of their services.
How does it affect a mortgage application?
If you have a student loan, most lenders will look at two things when checking your application:
- How much debt you have left
- How much you repay every month and income changes
As you know, student loans are directly deducted from your salary, together with your taxes. In the eyes of the lenders, a student loan is another expense that affects your ability to make repayments. However, this should not worry you. Focus on improving your debt to income ratio with student loans because the lower the ratio, the higher your chances of approval are.
Can a student loan stop me from getting a mortgage?
No. A large student loan does not deter lenders from approving your application, but it will influence how much money you are given. They look at your mortgage affordability in terms of how much of your net income is left after deducting all your expenses.
How do I get a mortgage with a student loan?
Like all mortgages, focus on perfecting your application first. Get your financial affairs in order by providing proof of income to ensure that you pass the affordability test and clearing any credit card debt and outstanding bills that you may have. Also, ensure that your deposit is enough for your lender’s requirement.
If you are unsure of how to start your application process, contact search mortgage solutions to talk to a mortgage broker.