First-time mortgage? Shop around and get some advice!
Are you a first-time homebuyer? We hear from one young professional who took independent mortgage advice…
People often tell you not to clear your student loan early, because it’s about the cheapest borrowing you’ll ever get and it doesn’t show up on your credit rating, which means it shouldn’t affect future borrowing.
But if you’re trying to get on the property ladder and you need a mortgage, think again….
A student loan can make a difference to your mortgage offer.
“When deciding how much you could borrow, lenders have to assess your ability to make the monthly repayments, so they take into account all your current outgoings – including student loan repayments. And as I found out, you’re likely to get a better deal if you’re loan-free!
I had only £6000 remaining on my Student Loan.
A major lender offered me:
£87,000 mortgage with my Student Loan in place,
or £102,000 if I paid off my loan first!
I did clear my loan, and got a better £110,000 offer from one of their competitors – it definitely pays to shop around!”
Get some advice
“A mortgage is a big commitment and with no previous experience, I was pretty clueless so I took on an independent mortgage advisor – £350, but well worth the money. She compared the deals that were around and explained what the relative costs would be over various mortgage options – 25, 30 or 35 years. She also coordinated my solicitor, estate agent, bank, surveyor etc. A helpful timesaver when you’re working, and particularly useful for a first time buyer.”
(Beth in Sheffield)