Drastic measures by first-time house buyers

[E53AMG]

Added to that is a lot of students are doing useless degrees that will not get them good jobs and the universities set students up with unrealistic expectations.

A few years back I had a woman (fresh out of university) with an MBA apply for a job that did not need an MBA and was a trainee role. She argued about the "trainee" salary because she had an MBA and felt that she should be paid a lot more. I agreed and told her that she could have the MBA salary but that we'd deduct training costs which would bring her back to the trainee salary............. she got the point....

If I were interviewing her I would have simply said yes you are absolutely right and over qualified which is why unfortunately we are not offering you the role, thank you for your time (let's face it with that attitude in an interview what would they be like in the job)!

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[Deleted member 65149]

Same problem in Australia....they are buying the country. Property is way overpriced even outside the CBD ....I lived about 30km out of Brisbane and even there, house prices were ridiculous.

At various times throughout my adult life I’ve contemplated moving to Australia but for various reasons didn’t. Now I don’t have to think about it because (a) the property prices have overtaken UK and (b) their immigration rules won’t let me, despite most of my siblings living there as Australian citizens.

 

[WDB124066]

Tell that to Han Solo when you are in a hurry Rory....

 

[Deleted member 6183]

Loan companies take into consideration student loan repayments when deciding how much they are prepared to lend which is why they ask for details of regular outgoings, stands to reason someone with a large student loan and a good income will be able to borrow less than someone on the same income and no or smaller student loan. This is following the new government guidance to lenders as part of the crackdown on unscrupulous lending.

This is why also why students who are looking to to take a modern degree rather than traditional academic, should think carefully whether an Apprenticeship or vocational study would be better suited to set them up for the future..

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Lenders do take loan repayments into account but not necessarily the balance, the decision is based on affordability rather than total loan balances. In that context your argument above doesn't hold water. Student loan repayments are mostly calculated as a percentage of income so larger loans don't have as much impact as you might think.
Ciaran's £67 repayment can actually be so insignificant that it makes no difference to a mortgage at all.

 

[E53AMG]

Lenders do take loan repayments into account but not necessarily the balance, the decision is based on affordability rather than total loan balances. In that context your argument above doesn't hold water. Student loan repayments are mostly calculated as a percentage of income so larger loans don't have as much impact as you might think.
Ciaran's £67 repayment can actually be so insignificant that it makes no difference to a mortgage at all.

So are you saying if you have a professional earning say £60k with a student loan to repay and someone earning the same with no student loan and all the other outgoings are identical, the same maximum amount of credit/mortgage will be available to both? Somehow that doesn't sound logical but then I am not a lender and can only go by what I have been told by my bank.

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[Doodle]

Not exactly, as their take-home salary will be slightly less. However, because of how it is paid (taken at source from your monthly pay, so effectively like income tax/NI contributions) it is not viewed in the same light as a conventional loan. It is not secured, has no finite duration, and as previously mentioned, is linked to your pay. If you're not earning, you're not paying.

 

[E53AMG]

Not exactly, as their take-home salary will be slightly less. However, because of how it is paid (taken at source from your monthly pay, so effectively like income tax/NI contributions) it is not viewed in the same light as a conventional loan. It is not secured, has no finite duration, and as previously mentioned, is linked to your pay. If you're not earning, you're not paying.

Quite a bit less at 60k about the same as my gas and electric bills combined so lower net income will result in a lower offer which is precisely the point in my first post..

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[Deleted member 6183]

So are you saying if you have a professional earning say £60k with a student loan to repay and someone earning the same with no student loan and all the other outgoings are identical, the same maximum amount of credit/mortgage will be available to both? Somehow that doesn't sound logical but then I am not a lender and can only go by what I have been told by my bank.

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No, that's not what I said.

 

[E53AMG]

No, that's not what I said.

So it does hold water [emoji6]

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[Deleted member 6183]

So it does hold water [emoji6]

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The size of the loan is not the driver for lenders making maximum loan decisions, the amount of repayment is with the exception of credit card debt where repayments are usually calculated at 3% of the balance.

Lenders use their own calculations regarding affordability decision making, some put more emphasis on student loans compared to others who don't.

Graduates pay the loan back as a percentage of their salary once they have reached the benchmark.

A graduate with a larger loan does not pay more than one with a smaller loan.

The residual balance is often written off.

The repayments are made net of income tax/NI.

The loans are not reported by the credit reference agencies.

For these reasons it's not as clear cut as you might think.

 

[Deleted member 126251]

At various times throughout my adult life I’ve contemplated moving to Australia but for various reasons didn’t. Now I don’t have to think about it because (a) the property prices have overtaken UK and (b) their immigration rules won’t let me, despite most of my siblings living there as Australian citizens.

I lived there for 8 years. It is not only housing. I'd lived in Tokyo before we moved to Australia and our grocery bill in Oz was higher than it had been in Tokyo. I loved OZ but my son lives in the UK and you are looking at over 30hours of travel - door to door

 

[Deleted member 65149]

I lived there for 8 years. It is not only housing. I'd lived in Tokyo before we moved to Australia and our grocery bill in Oz was higher than it had been in Tokyo. I loved OZ but my son lives in the UK and you are looking at over 30hours of travel - door to door

I’ve done the UK - OZ trip a dozen times or more now and it’s definitely not fun.

 

[E53AMG]

The size of the loan is not the driver for lenders making maximum loan decisions, the amount of repayment is with the exception of credit card debt where repayments are usually calculated at 3% of the balance.

Lenders use their own calculations regarding affordability decision making, some put more emphasis on student loans compared to others who don't.

Graduates pay the loan back as a percentage of their salary once they have reached the benchmark.

A graduate with a larger loan does not pay more than one with a smaller loan.

The residual balance is often written off.

The repayments are made net of income tax/NI.

The loans are not reported by the credit reference agencies.

For these reasons it's not as clear cut as you might think.

You posted earlier "Graduates pay the loan back as a percentage of their salary once they have reached the benchmark.

A graduate with a larger loan does not pay more than one with a smaller loan."

This Statement surely must be wrong for those on good incomes, if the repayments are a % of income someone on on a larger income will pay back more than someone on a smaller income.

Student loans also attract interest at 3% plus inflation during study, inflation rate while income remains below £21k and then inflation rate plus 3% once income exceeds £41k. So If the loan is larger so will be the total amount repayable.

Some graduates who go on to earn 6 figure salaries will totally clear their loans!

The lenders to an extent have their hands tied by their regulatory body (FCA) in the way they lend, no longer can they lend indescriminately but have to show the regulators that abilities to repay have been fully investigated prior to lending (stress testing) so student loan repayments will effect borrowing.

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[Deleted member 6183]

There We Are Then

 

[Piff]

In the "tools-whats-in-your-box" thread I posted about a chap who buys Snap On tool, mainly from ebay. He is 24 IIRC, married, living in a rented house. Him & wife both work and are trying to save for a house deposit.
Last weekend he went on a track day. Talking to him this morning he asked if I wanted to join him & others on a day out to Duxford next weekend. I said words to the effect of "why don't you stay at home & save money towards your house deposit?"
His reply surprised me and perhaps reflects the attitudes of his some of his generation.
"I can't, I already put £200 a month into a Help to Buy ISA and that's the maximum you are allowed to save!"

 

[AMGeed]

Genuine question here but is this still the case?

I thought the modern way was everyone chips in including the Bride & Groom? Maybe wishful thinking on my part.

My share was £6k Barely covered the reception and venue

 

[Deleted member 113659]

My share was £6k Barely covered the reception and venue

All hypothetical anyhow Roger. My daughter won’t be getting married.

 

[AMGeed]

All hypothetical anyhow Roger. My daughter won’t be getting married.

It is fun sizing up the boyfriends and eliminating them for various reasons. I have been right about two so far, thank goodness.

 

[Deleted member 113659]

I will of course make exceptions. If for instance her chosen one has many acres of building land they MAY be considered.

 

[AMGeed]

But it's a red herring by anyone suggesting the student loan is affecting their children's ability to buy a house. If paying £67 per month prevents you getting a mortgage...then you shouldn't even be looking for one.

I agree totally. With interest rates about to rise, anyone pushing to their repayment limits could be in big trouble very quickly. It caught me out in the '80's.

The £67 a month I agree is neither here nor there when considering a mortgage loan, but he has been paying for some time and it could have been going towards a deposit.
I mentioned it previously because it is a debt that will have to be repaid eventually so I think it is valid.