Do student loans affect mortgage eligibility?
Are student loans treated differently when it comes to buying your first home – or are they assessed the same as other borrowing? Our guide investigates
Key Takeaways
Mortgage lenders consider your student loan repayments as part of your regular outgoings when assessing how much you can borrow
Student loans don't directly reduce your credit score, but repayments do impact your monthly affordability, which may reduce the loan amount you're offered
Having an outstanding student loan shouldn’t put you off trying to get a mortgage, but individual situations will all differ
Lenders vary in how they treat student loans, so shopping around or using a mortgage broker can improve your chances
Is a student loan taken into account for mortgage eligibility?
Your student loan won’t be counted in the same way as other debts like credit cards or personal loans, but it can still affect your ability to borrow.
Mortgage lenders in the UK will assess your overall affordability before making an offer, and your student loan payments are considered as part of your financial commitments.
The monthly repayment amount is factored into your debt-to-income ratio, which helps lenders assess whether you can comfortably manage a mortgage.
If your student loan repayments are relatively low, it may have minimal effect. But if you're paying a significant amount, it could limit how much a lender is willing to offer.
What is the difference between eligibility and affordability?
When applying for a mortgage, eligibility refers to whether you meet the basic criteria set by the lender, such as age, income, and credit score.
A student loan doesn’t usually leave a mark on your credit file, so while your student loan won’t directly affect your eligibility in most cases, it can still play a role in how much you can afford to borrow.
This is where affordability comes in, and is all about whether you can comfortably manage the mortgage repayments alongside your other financial commitments.
Lenders will assess your:
Income
Monthly outgoings
The impact of your student loan repayments
In order to determine how much you can borrow.
Do student loans affect your credit rating?
In most cases, student loans don’t directly affect your credit score in the UK.
Student loans are managed differently from other types of debt. They don’t appear on your credit report like personal loans or credit cards, so simply having a student loan won’t lower your score.
However, when you apply for a mortgage or other credit, lenders might ask about your student loan repayments as part of your affordability checks.
Case studies: How a student loan can affect your ability to get a mortgage
Emma, 30, works as a marketing manager earning £35,000 annually. She has a student loan balance of £15,000, and her monthly repayment is £150. Emma has saved a 15% deposit for a £200,000 home and is now looking to apply for a mortgage.
Eligibility: Emma meets the basic eligibility criteria for a mortgage. She’s in full-time employment with a good credit score, and her income is steady. However, because she has a student loan, lenders will factor in the monthly repayment as part of her overall debt-to-income ratio, which affects how much she can borrow.
Affordability: Emma’s student loan repayment of £150 per month will be included in the lender's affordability assessment, reducing her disposable income and potentially limiting how much she can borrow. While she can afford the mortgage repayments, the student loan affects the total loan amount a lender might offer her. If Emma didn’t have the student loan, she might qualify for a higher loan amount or better terms.
James, 30, works as an IT consultant and also earns £35,000 a year. James has no student loan or other significant debts, and has saved a 15% deposit for a £200,000 home and is applying for a mortgage.
Eligibility: Like Emma, James meets the basic eligibility criteria for a mortgage, with stable income and good credit. However, because James has no student loan or other outstanding debts, lenders will assess him as a lower risk.
Affordability: James' affordability is more straightforward. Without the monthly repayment obligation of a student loan, he has more disposable income, which may result in lenders offering him a slightly higher loan amount or better terms than Emma. His higher available income means his debt-to-income ratio is lower, making him more likely to secure a favourable deal.
While both Emma and James are the same age, earn the same salary, and have similar credit scores, the key difference is Emma’s student loan. The monthly repayment on her loan affects her affordability, meaning she might not be able to borrow as much as James.
Case study 1: Emma, a first-time buyer with a student loan
Case study 2: James, a first-time buyer without a student loan
Conclusion
Looking to get a better deal when applying for a mortgage? Our guide provides some simple steps to improving your credit score.
Do you have to declare a student loan on a mortgage application?
Yes, you must declare your student loan on a mortgage application. Failing to disclose debts could harm your mortgage application and future financial reputation.
While student loans aren’t usually seen as traditional debts like credit cards or personal loans, they still represent a monthly outgoing, and are considered part of your overall financial commitments.
You’ll typically be asked to provide details of your student loan, including the balance and monthly repayment amount.
This helps lenders calculate your affordability and ensure that you can comfortably manage both your loan repayments and your potential mortgage payments.
Should I pay off my student loan before applying for a mortgage?
While it might sound like a good idea to pay off your student loan before applying for a mortgage, it might not make practical sense if you are trying to get on the property ladder.
It’s a personal decision, but the money you have to pay off the loan might be better served to increase the deposit you can put down on your property.
As well as reducing the amount you’ll need to borrow through a mortgage, a larger deposit may also help secure a better mortgage rate.
Instead of focusing solely on clearing your student loan, consider improving your credit score, increasing your savings, or reducing other high-interest debts.
If your student loan repayments are manageable and not too high relative to your income, it likely won’t prevent you from securing a mortgage.
How can I improve my chances of getting a mortgage if I have a student loan?
Having a student loan doesn’t mean you can’t get a mortgage – but it might affect how much you can borrow. Here’s how to boost your chances of getting on the property ladder:
Start by checking your credit file. Make sure everything’s accurate, and correct any mistakes. Even a wrong address or outdated account can raise red flags with lenders.
A longer mortgage term – say, 30 or 35 years instead of 25 – spreads your repayments over more time, making monthly payments lower. This can improve affordability, though you'll pay more interest overall.
The more you can put down upfront, the less you need to borrow. A larger deposit (think 10% or more) reduces the lender’s risk, making it easier to secure a deal and gives you access to better deals.
Not all lenders treat student loans the same way. Some will factor it more heavily into affordability checks than others. A comparison site such as MoneySuperMarket or a whole-of-market mortgage broker can help you find lenders most likely to approve your application.
Tidy up your credit report
Pay down other debts
Save a bigger deposit
Shop around or use a mortgage broker
Personal Finance Expert
Our expert says
Because a student loan is structured differently from other debts, where the less you earn, the less you must pay back, it typically doesn’t pose the same risks to your finances. This means that while we are all in different financial situations, many wannabe first-time buyers will still be in a position to build a deposit and apply for a mortgage.
Compare first-time buyer mortgages with MoneySuperMarket
It’s easy to find and compare mortgages from a range of leading lenders with MoneySuperMarket.
Whether you’re buying your first home or moving up the ladder, and whatever type of mortgage you’re looking for, our mortgage comparison tool can help you find a great deal.
We’ll just ask you a few questions about the property you’re looking to buy and how much you’ll need to borrow. We’ll then show you results including the initial interest rate and your monthly repayments and any product fees you’ll be asked to pay.
Your home may be repossessed if you do not keep up repayments on your mortgage.
