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First-Time Buyer Affordability Calculator

Calculate your maximum property budget with student loan debt. See exactly how loan repayments reduce your borrowing capacity.

Significant Student Loan Impact!

Your student loan reduces borrowing capacity by: £17,154

Property budget reduction: £17,154 (8.8%)

Monthly student loan payment of £71 significantly reduces how much lenders will let you borrow.

How It Works

Lenders assess student loan monthly payments as debt commitments, reducing your affordability by approximately £18-20k per £100 monthly payment.

£

Monthly gross: £3,167

£

LTV: 86.0%

%

Monthly payment: £71

Your Budget

Max mortgage:£153,846
Max property:£178,846
Monthly payment:£899

Affordability Comparison

With Student Loan

Max mortgage:£153,846
Deposit:£25,000
Max property price:£178,846
Monthly mortgage:£899
Student loan:+£71

Without Student Loan

Max mortgage:£171,000
Deposit:£25,000
Max property price:£196,000
Monthly mortgage:£1,000
Student loan:£0

Student Loan Impact

£17,154
Reduced property budget
8.8%
Affordability reduction

Monthly Budget Breakdown

Monthly gross income:£3,167
Mortgage payment:-£899
Student loan payment:-£71
Bills & council tax (est):-£200
Remaining monthly income:£1,996

Affordability ratio: 37.0% of gross income

Lenders typically prefer housing costs below 40-45% of gross income.

Total Upfront Costs

Deposit:£25,000
Stamp duty:£0
Fees & surveys (est):£2,000
Total needed:£27,000
✓ First-time buyer stamp duty relief applies (property under £425k)

How Lenders Calculate Your Capacity

Base borrowing (4.5x salary)£171,000
Student loan reduction-£17,154
Final max mortgage£153,846
90%

Each £100 monthly student loan payment reduces borrowing by approximately £18,000-£20,000.

Key Insights for Graduates

What This Means

  • • Student loans reduce borrowing capacity, not eligibility
  • • Lenders assess monthly payment, not total balance
  • • Focus on building larger deposit to compensate
  • • Consider joint applications to improve affordability

Don't Overpay Loans

  • • Overpaying loans barely improves affordability
  • • £10k off loan saves ~£60/month = £10k extra borrowing
  • • Same £10k as deposit = £10k extra property + better rates
  • • Always prioritize deposit over loan overpayments

Understanding Student Loan Impact on Mortgages

How Lenders Assess Student Loans

  • • View monthly payment as debt commitment
  • • Reduce affordability by ~20x monthly payment
  • • Don't care about total balance owed
  • • See payment on payslips via PAYE
  • • Apply standard income multiples minus impact

Strategies to Improve Affordability

  • • Save larger deposit (15-20%+ for better rates)
  • • Joint application with partner/family
  • • Wait for salary increases to grow capacity
  • • Consider regional areas with lower prices
  • • Never overpay student loans to help mortgage

Why Not to Overpay Student Loans for Mortgage

Many graduates wonder if overpaying their student loan will improve mortgage affordability. The mathematics show this is almost never worthwhile:

  • • £10,000 overpayment reduces your balance and saves ~£60/month in payments
  • • This £60/month saving increases borrowing capacity by only ~£10,000-£12,000
  • • The same £10,000 used as deposit increases property budget by £10,000 AND secures better rates
  • • Most student loans write off after 40 years anyway—overpayments often wasted

Always prioritize deposit savings over student loan overpayments.

Ready to Start Your Property Journey?

Understanding your true affordability with student debt helps you search for properties in the right price range and avoid disappointment.

Help to Buy GuideShared Ownership Calculator

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