Freshers’ Week will be when most students receive the first tranche of their student loan.
New research from the PLSA reveals that 54% of 18-35 year olds with a student loan don’t consider it to be debt and 64% believe their student loan will not count against them when applying for a mortgage.
A typical student studying in England will graduate with over £40,000 of student debt which they are told will not affect their credit rating. Although this is correct, since the Mortgage Market Review, introduced in April 2014, lenders can include student loan repayments into mortgage affordability calculations. As a result student loan repayments may affect someone’s eligibility for a mortgage under those calculations.
The research highlights how strong the desire is among 18-35 year olds to invest in property. Given an unlimited sum of money 42% say they would prefer to invest in property to get the best return, and almost one in five are already saving towards a property (18%). Recent research has also shown that 69% of young adults feel that owning their own home is essential to feeling that they have succeeded in life.
Joanne Segars, Chief Executive, Pensions and Lifetime Savings, commented: “It’s very important that young people have an accurate picture of how their student debt could affect their plans to get onto the property ladder. In this current climate getting started is tough for young people, property prices are high and graduate salaries are at their lowest since October 20133 - and they also face a struggle to save a deposit with interest rates so low.
Having a clear understanding of their situation will help young people plan confidently for their long-term financial future, including plans for purchasing a property which many people tell us they factor into their retirement plans.”
