When applying for a mortgage, many worry about the impact of student loans. If that's you, then you’re not alone, and we have some good news!
The good news? You can still secure a mortgage with a student loan. While it might affect how much you can borrow, lenders focus on affordability, not just existing debt.
This blog clears up common questions and misconceptions about how student loans influence the mortgage application process in the UK, including eligibility, affordability checks, credit scores and house deposit requirements.
If you’re a graduate, current student or starting university this year, keep reading to find out how your student loan may impact your mortgage application.
Yes, you can get a mortgage even if you have a student loan. However, a student loan may influence how much money you can borrow. Mortgage lenders primarily assess your affordability (your ability to make monthly repayments) rather than focusing solely on your existing debts.
While student loan repayments reduce your take-home pay, they are often considered differently compared to other types of loans. This is because these payments depend on your income and stop once your earnings fall below a certain threshold.
To determine your mortgage eligibility, lenders will evaluate:
Yes, a student loan is likely to affect a mortgage application, but not in a drastic way. While they won't block your mortgage application, they might impact affordability checks. Since student loan repayments are automatically deducted from your wages, your monthly disposable income is lower which may limit the amount lenders are willing to lend you.
As student loan repayments are based on your income rather than the total amount owed, lenders typically focus on your monthly repayments rather than the overall loan balance.
No, your student loans do not appear on your credit file and do not impact your credit score, which makes them different from other types of loans. That being said, a student loan can still affect your financial profile when applying for a mortgage, as mentioned above.
This isn't anything to worry about because student loans aren’t treated as traditional debts, meaning that they don’t directly harm your creditworthiness in the eyes of mortgage lenders.
No, you cannot use your student loan to apply for a mortgage, as they are not considered a stable or permanent source of income, nor are they taxable. Mortgage providers don’t consider funds that aren't taxable as income.
While you cannot use your student loan as income when applying for a mortgage, it could be possible to use leftover student loan funds towards a house deposit. Though this is an option, it’s best to rely on savings or other income sources for your deposit to improve your mortgage eligibility.
The deposit required for a house in the UK varies depending on the property price and the lender's requirements. Typically, you’ll need at least 5-10% of the property’s value for a deposit, though putting down a larger deposit (between 10-20%) can improve your chances of approval and may secure you a better mortgage rate.
A higher deposit will put you in a lower loan-to-value (LTV) ratio, which opens more competitive mortgage rates, whereas if you have a high LTV, you may only be offered higher interest mortgage rates.
There is no one set figure as to how much you should earn before you can get a mortgage. However, your income does influence how much you should be able to borrow. Generally, lenders offer mortgages of up to 4x and 4.5x your annual income.
Other factors that can influence your affordability when considering a mortgage include:
No, you should not declare your student loan as income on a mortgage application. Lenders do not consider student loans as part of your earnings. Instead, they focus on your employment income, savings, and other qualifying revenue streams.
Yes, mortgage lenders will ask about your student loan repayments as part of their affordability assessment. Being transparent about your financial obligations ensures an accurate evaluation of your application and avoids any chance of mortgage fraud.
Knowing how student loans may affect your mortgage application is key to preparing for homeownership after university. By carefully managing your finances and giving lenders a clear picture of your financial situation, you can improve your chances of securing a mortgage, even with student loans. Planning ahead before university also brings peace of mind for your future.
So, if you haven’t secured student accommodation yet or are still wondering how student accommodation works, we’ve got you covered! Our range of affordable yet modern options gives you the flexibility to stay within your budget while experiencing high-quality student living. Browse your options today or reach out to our team with any questions.
Technically a student loan is counted as a loan, but it is different from typical loans like personal loans or credit card debt loans. It will not hinder your mortgage application.
Unless you're in a position to clear your entire student loan debt in one go, it's not really worth overpaying it. A one-off overpayment will not reduce the amount you repay in subsequent months, which is the figure lenders are most interested in. You can manage your student loan balance here.
