![]() ![]() However, if you spend up to around 20% of your total borrowing limit each month, and then pay it off in full, on time, every month this shows you’re responsible with credit.Ĭars are expensive and mortgage providers know that. For instance, if you’re always maxed out and only repay the minimum each month, mortgage lenders won’t look kindly on that. It all depends on how large your student loan was, whether you’ve repaid every monthly payment on time and in full, and how much time is left on the loan term.Ĭredit cards aren’t always a bad thing - yes, honestly! They can help you build a good credit score, even if you’ve had previously poor credit. ![]() commercial) while you were a student, this could affect your eligibility for a larger mortgage loan. If, however, you took out other loans (e.g. The loan repayments are taken from your pre-tax salary each month – so they shouldn’t cause an issue for mortgage lender decisions. If your student loans are from the Student Loans Company, this is a Government-backed financial scheme. So, which debts do you have and how will they affect your mortgage application? ‘Bad debt’ is higher-risk or more expensive forms of credit, such as store cards or payday loans. ‘Good debt’ consists of low-risk loans, such as student loans or car finance. Lenders also differentiate between ‘good debt’ and ‘bad debt’. You may need to spend time paying off these debts rather than saving up for your deposit. Understanding what mortgage lenders consider a debt will help you to eliminate or reduce the risk of being rejected for a loan. What is classed as a debt for mortgage purposes? However, it helps if you can show affordability for a mortgage by having reduced expenses or a large income with plenty of monthly free capital. ![]() If you can afford to repay your agreed debt payments AND have spare capital, this could improve your chances of getting mortgage approved.ĭebt does affect how much you can borrow - there’s no getting around that. Mortgage lenders look at the big picture. We’ve taken a look at them to help you understand how they affect your chances of getting a mortgage.īefore you look at your debts, consider your income and other expenses. There are different types of debt, from student loans to bankruptcy. You’ve found a house you would love to buy but you’re unsure if your debt will affect your mortgage eligibility. ![]()
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