If you left university with debt in the form of a student loan, and have defaulted on the repayments, you could have defaults on your credit file. If you are currently wondering if you can get a mortgage with a default on a student loan. Here’s our short answer, followed by some more in-depth information.
Many of the high street lenders will decline mortgage applications from people with defaults on a student loan. However, there are certain lenders who will approve applicants with bad credit history or defaulted credit accounts such as student loans.
If you have defaulted in the past, then don’t panic.
Our advisers are specialists in helping applicants with bad credit and defaults in getting a suitable mortgage.
Every week they help with hard to place mortgages, working with a wide range of lenders who are prepared to offer mortgage deals to applicants with defaults on their file.
To find out how our mortgage advisers can help you, please contact us today to talk to a friendly member of our staff. Within a few minutes you could be on your way to getting onto the property ladder.
How student loan defaults can harm your mortgage prospects
With recent changes to how students finance their education there has been an increase in student loan applications. Statistics show that more than £16 billion pounds is lent each year in the UK with the average debt amount being as high as £32,000.
There won’t be many students who manage to graduate without having significant debt. In some cases, students can even default on those loan repayments which can make taking out a mortgage tricky.
But should that stop you getting a mortgage, and what happens if you have defaulted on your student loan?
No, not necessarily.
Having defaults on your credit file is something that will often lead to you being declined by most high street lenders. They tend to approve applicants who have good credit history, no defaults, and a clean financial record.
But there are lenders in the market that our advisers have access to who are prepared to loan to applicants with defaults. And with so many UK people now having student loan debt, it’s becoming more and more common.
How to get a mortgage with a default on a student loan
There are several specialist lenders who approve mortgage applications from people with defaults. Our advisers work with these specialist mortgage lenders every week, and know how their criteria is set, and how best to submit applications into them.
Every lender is different, but there has been an increase in lenders working in the adverse credit space who have emerged since the credit crunch.
With more people having financial difficulty, this trend for default mortgages being offered probably won’t change. This means that missed payment on a student loan might not be as big an issue as you first thought.
But that doesn’t mean it’s simple to get approved for a mortgage with a default on your file. It will require more work, more investigation into the right lender, and the know-how on the market.
This is where a specialist mortgage adviser can really help, as they will help you through the process including aspects shown below.
Examining your credit file and rating
Getting a mortgage with a default on a student loan requires an understanding of lender policies and criteria. Much of this will be based on your credit file.
For example, if your defaults have occurred in the last couple of years, then it’s pointless putting an application into a lender who doesn’t allow this.
You will need to get a credit report and then pass that over to your adviser. It will include items such as:
- Credit accounts on items like cards, loans, and phones
- Dates you defaulted on the student loan including the amounts
- Settlement dates
- Information on any CCJs, IVAs, and bankruptcy
That will give them a lot of information to base which lender your application will go into.
To get started, call us today and we will ask a few simple questions before passing you over to a selected specialist adviser from our large panel.
Can you default on a student loan?
Lastly, many people believe you can’t default on a student loan. This isn’t the case.
Student loans are a contract, just like any other type of loan agreement (find out more). If you don’t repay the loan back, then it is possible to default.
And that could lead to issues with you applying for a mortgage in the future.
The UK Student Loan Company can take legal action against you, but it needs to be filed within 6 years of the default for the court to enforce the debt.
What to do next?
If you would like to explore your mortgage options and have previously been declined due to having defaults on your student loan, then don’t panic.
It could be that with the right advice and adviser, your application will be approved by certain specialist lenders.
Get in touch with us now to see how we can help.
- Statistical data source: https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN01079