A reader from Luton is planning to study, but is worried about how student debts will hit his mortgage chances after graduation.
Drawing on years of experience, mortgage adviser Katie Tucker – of mortgage broker Mortgageforce – tackles the problem.
Ashley from Luton asks:
I am about to embark on a three year degree and when I graduate I will have a total debt of £33,000.
Is this going to dramatically affect my chances of getting a mortgage?
I’m in a catch 22 situation; if I don’t go to university I’m not going to get where I want to be, but by going to university I jeopardise my future plans for owning my own home.
Any advice would be most appreciated.
Will a debt make it difficult for you to get a mortgage?
Only in as much as any monthly loan commitment; commitments of any sort are deducted from your income before working out what size loan you can afford.
Realistically, you would work hard to pay off as much of the debt as possible once you graduate, whilst also saving for a deposit; and you would structure your student debt repayments so they are low once you apply for a mortgage later on.
Getting a uni place then deferring it to having a year out to work full time might help you, if you can stay with your parents: I was always jealous of my friend who got a job, paid half of his salary every month to his dad to put in a savings account, (moaned about it incessantly) and then had thousands of pounds to start uni on (and stopped moaning).
He was also sorted for a very enviable summer job every year – another vital way of keeping uni costs down.
You have more of a life question than a mortgage question here, and it is a decision we have all had to make.
If I may add a totally non-mortgage related personal note, I can tell you it took me eight years to pay off my university experience, and it’s the best investment I ever made.
Often employers consider you for roles that have nothing to do with your degree: because you have proved you have the guts and diligence to move away and work hard for a long term goal, on your own.
But quite apart from jobs, the experience itself can help you see life differently, and it almost certainly will never be as easy to take this chance again once you have embarked upon adult life, so it depends what you want to get out of the university experience. I was also the first of my friends to get a house by the way.
Good luck Ashley, whatever you decide on, make it count.
If you have a question for Katie, go to the myfinances.co.uk Ask the Mortgage Expert section.
For more information on the issues discussed here, go to www.mortgageforce.co.uk.
Mortgage Force Ltd is authorised and regulated by the Financial Services Authority, and is entered on the FSA register (www.fsa.gov.uk/register) under reference 301046.
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