According to government statistics, student loan debt in the UK is set to reach £330 billion by the middle of the century. Currently more than £13 billion in student loans is lent every year. That’s creating a lot of students who are graduating with on average £33,000 in outstanding loans.

Yet even with that amount of debt, graduates in the UK still want to get on the property ladder, even if outstanding student loan debt can make it more difficult.

Getting a mortgage with a student loan debt is possible and won’t disqualify you being approved. Some mortgage lenders could offer preferential rates, but all will examine your monthly financial commitments, and that could include the terms of the student loan.

Is a student loan taken into account when applying for a mortgage?

Yes, it will be. But many lenders don’t treat student debt the same way as they might personal loans or credit card debt. 

Does a student loan affect you getting a mortgage?

Well it depends on a wide range of factors, and not all relating to the student loan debt. As well as the student loan, lenders will also look at any other debts you have, your financial commitments, and wage slips and income history from your employment.

Read on below for more information and detail about the processes involved.

Will a student loan stop me getting a mortgage?

Some mortgage lenders will want to know how large your student debt it, what the monthly repayments are, and how long you have left on the repayment terms.

But don’t be concerned, as having a student loan is extremely common in the UK. It doesn’t necessarily mean you have a black mark on your credit file and will be treated very differently to personal loan and credit card debts.

Lenders will examine your monthly repayments and then calculate how that, and other financial commitments will impact your ability to pay a monthly mortgage.

It’s also worth considering that student loan repayments are repaid depending on how much you earn. That means that those in higher income brackets are going to have higher monthly financial commitments.

There are currently two repayment plans in the UK (as at December 2019):

  • Began course before the 1stof September 2012: repayments start when you earn over £18,000 a year.
  • Began course after the 1st of September 2012: repayments start when you earn over £25,000 a year.

Your repayments will be set at 9% of your income and are deducted from your taxable earnings via HMRC from your employer. Here are some examples below taken from the HMRC website on how that will affect your pay each month:

How loan repayments could affect your pay

Here are some examples from HMRC’s website on how much you would be repaying each month on your student loan.

That means, the more you earn, the more you pay back each month.

These factors along with your monthly outgoings, other debts and financial commitments, and any deposit will be used to calculate how much you can borrow.

Will a student loan affect my credit score?

Student loans don’t appear on your credit file and credit history. There is one exception to this, and that’s with people who took a student loan out pre-1998 and defaulted on any of the repayments.

We’ve written in depth about defaults on student loans elsewhere in our blog as they can have a negative effect when applying to get a mortgage.

For more recent student loan borrowers, they only way in which a lender will know about this debt is if they actually ask you as part of the application.

Some lenders will ask, some won’t.

However, we do recommend full transparency when applying for a mortgage, as it is key to understanding your affordability not just from the lender’s side, but also personally.

In simple terms, some lenders might look at your student loan repayments as part of their qualifying criteria for offering you a mortgage loan.

How much can I borrow?

The estimates below are a rough guide only and are courtesy of the excellent Which consumer website. These numbers should not be considered 100% accurate, as lenders will take many factors into account when assessing your mortgage application.

How to Get a Mortgage with a Student Loan Debt

These estimates from Which show how much you might borrow on a mortgage if you have a student loan debt.

To get an accurate estimate on how much of a mortgage you could borrow with a student loan, contact us today for support from one of our specialist advisers.

Will other debts stop me from getting a mortgage?

All mortgage lenders will examine your financial situation in detail before approving a mortgage loan. This will take the form of credit checks and looking at your income history, affordability, and any outstanding or historical debt.

Aspects that will form part of their assessment can include items such as:

  • Wage slips and tax returns
  • Outstanding debt on credit cards, loans, car, phone bills and so on
  • Defaults on previous loans and bad credit history

We’ve previously blogged about how our advisers can help students who have defaults on their student loan. That experience and knowledge applies to any applicants with bad credit, and we have a larger section relating to applying with bad credit history.

In simple terms, any debt, particularly that where you might have missed payments, can negatively affect your mortgage application.

Lenders will assess your application on a case by case basis, but some lenders have stricter criteria than others.

Ultimately though, they are looking to calculate whether they think you will be able to afford repayments on a mortgage loan. If they don’t think you can, you will be declined.

However, our adviser are specialists in bad credit mortgages, and in many cases will be able to find a mortgage for you, no matter what the circumstances.

If you do have other debt in addition to your student loan, then you should try to reduce or clear it before applying, but it’s not always as simple as that.

To find out how our advisers can help you get a mortgage, contact our friendly team today who will be able to partner you with the right adviser to suit your circumstances.

How to get a mortgage loan with student loan debt

If you are looking to buy a home, and you are a student loan borrower, your application should be carefully planned.

With the help of our advisers, you can find the best lender to suit you, regardless of whether they take your student loan debt into account as part of their affordability calculations.

Our advisers will help you to make the best case that you’re the right candidate for them, and one to whom they will be prepared to offer a mortgage loan to.

To get started, contact us today. Our friendly team will ask you a few simple questions on a no-obligation basis and then partner you with the adviser best suited to you.

Getting approved for a mortgage with student loan debt

Our advisers will help you plan your application and structure it in a way that will be likely to be accepted by certain UK lenders who loan to those with student loan debt.

Here are the steps involved, and how long things could take.

  1. Contact our mortgage advisers.
  2. Provide basic financial information including student loan information.
  3. Your application will then be sent to a lender.
  4. Get a mortgage approved in principle.
  5. Find a property you would like to purchase.
  6. Make an offer.
  7. Get the full mortgage offer approved.

From start to finish, it can take between 18 to 40 days to have a mortgage application approved.

You can read more in full what each step entails and how long other aspects take in our guide to how long mortgage applications take.

What to do next

If you are trying to get a mortgage with student loan debt, chances are might have already been declined by some of the high street lenders if they use this as their qualifying criteria.

As you can see from our guide, you can still qualify, and working with one of our advisers could get you moving a lot quicker, with an application approved by one of their specialist lenders.

Phone or email us today, and you could very quickly be on the way to getting your first steps onto the property ladder.