Mortgage expert reveals truth of student loan impact on home-buying hopes

A MORTGAGE expert has revealed the truth on exactly how student loans can affect your borrowing hopes.
Many people leave university with a large debt that can often run into tens of thousands of pounds and take many years to pay off.
Such a significant debt can therefore play an important role in whether you can secure a mortgage.
Richard Moring, director of RM Mortgage Solutions, said: “It’s quite well-known that your student loan doesn’t usually show up on your credit file in the same way other loans do.
“However, that does not mean it can’t or won’t be considered when you apply for a mortgage.
“A lender will look at your incomings and outgoings to determine whether or not you will be able to afford the repayments.
“That’s where the student loan comes into play, as you’re likely making monthly repayments on it in the same way you make other payments such as a car loan repayment or mobile phone contract.
“If you’re paying a few hundred pounds per month to service your student loan, it takes money away from what’s available to repay a mortgage.
“A lot of factors go into whether or not your mortgage application will be successful, and you might not be aware of all of them, so it may be worth speaking to a professional to guide you through the process.”
While exact student loan borrowing amounts can vary a lot from person to person, the funds are typically used to pay tuition fees and living expenses while studying at university.
The debt can run into tens of thousands of pounds for students who borrow the maximum amount each year and spend a number of years studying.
As such, it can have a knock-on effect on other future lending plans, such as a mortgage.
Student loans do not usually go on a person’s credit file or affect their credit rating, which is part of what lenders will use to inform their decision on a mortgage application.
Despite this, borrowers are urged to explore the other ways a large outstanding loan may affect their home-buying plans.
Mr Moring added: “Lenders use strict criteria when deciding whether to approve a loan.
“They want to be confident you will meet the repayments and therefore will study your current and potential future outgoings.
“When applying for a mortgage, it is advisable to check your credit report and tackle any problems it may bring up.
“For example, a history of overusing credit facilities, from long-term loans to short-term borrowing, is a red flag that someone may not be able to manage their finances properly.
“Meanwhile, regular use of gambling platforms, from online bingo to sports betting, can raise concerns that you are not the type of person they want to lend to.
“Understanding the process of a mortgage application, what’s good and what’s not, can really help boost your chances of being successful.”