Many worried parents and (former) students wonder if it is possible to buy a house while you still have a hefty study debt at DUO. To give a short answer: yes, you can! So the one who is sitting in the metamorphosis from student to working can breathe quietly. However, with mortgages in general, the higher the debt, the harder it is to get a mortgage. Except if you have a high income, but most starters earn modally.
It also depends on whether you started your study or after July 2015. The ones that started after the summer of 2015 have to borrow everything and do not receive student finance. Those who did receive student grants often have a lower debt.
Before you can take out a mortgage, you have to meet numerous conditions, and that is quite logical in itself. You borrow a lot of money from the bank that you pay back later. There are also a lot of legal rules for banks, just to ensure that you do not get caught up in financial penalties. If you want to buy a house, in addition to financial obligations such as the student loan, two other main issues are looked at: housing value and income.
One of the first things that is checked to see if you are eligible for a mortgage is the current market value of your intended home. This amount is determined by an independent expert, so you can safely assume that it is correct. If you still want to build a lot or if repair or installation work is required, this can affect your mortgage. The law stipulates that it is not possible for you to have more than an agreed percentage of the home value as a mortgage. After many successive reductions by the government, it is now so clear that you can borrow up to the entire market value of the house, 100%. The only possibility to borrow more is when you make the new house energy-efficient, but you need an income of € 33,000 per year for that. Moreover, it is also questionable whether you want to realize that right away with your first owner-occupied home.
The bank simply wants to know if you are able to pay the mortgage in the coming years. Logically, your income and expenses and loans are looked at. The bank partly determines for you what you can spend on mortgage costs. If you earn a lot you have to pay more mortgage, but also more student debt and if you earn less less the other way around. People with a permanent contract obviously have a good basis to get a mortgage for a house that matches their income, also with a student debt! However, there is also a downside: if your student debt is sky-high and you do not have such a high income, it becomes more difficult.
In order to determine whether you will receive a mortgage, the market value of your intended home will first be considered, then your income and then your (study) debts. It works simple: the more study debt you have, the less money remains to pay off your mortgage. The amount of your student debt depends, of course, on how long you have studied and how much you have borrowed from ‘ome’ DUO. People who fell under the old system and therefore received a scholarship are usually less likely to pay a higher debt than students who started their studies after September 2015. This generation only receives an allowance if both parents have a low income. Otherwise everything has to be borrowed. The advantage for them is that they can do 30 years to pay off their debt. The ‘old generation’ can do that for up to 15 years.
With the old system, before July 2015, you will pay 0.75% per month of your entire study debt at DUO. When looking at a mortgage application, they do not see what you have already paid off, but just how many percent of the total you pay each month to repay the loan. So if you have a study debt of € 20,000 you pay € 150, – per month to DUO. Have you already paid € 10,000? Bad luck, they still look at your original student debt and your monthly repayments. The amount of in this case € 150, – you get less per month mortgage. This falls under debts and the bank calculates when applying for your mortgage. If you want to easily calculate your maximum mortgage with a student debt, you can do it here .
With the new system, after July 2015, it is true that you pay 0.45% of your student debt per month at DUO. This is lower than the old system, because you can not pay 15, but 30 years on the repayment. Purely because this generation does not receive a scholarship and therefore needs to borrow more. If you have accumulated a student debt of € 40,000 at the end of the trip, you must transfer € 180 per month to DUO. When applying for a mortgage, you logically receive € 180 less per month in mortgage. Calculate your maximum mortgage here .
Some people with a study debt consider ignoring the mortgage application, so they can buy a nice house faster with a higher mortgage. A study debt at DUO is not seen as a standard debt such as paying off a boat or car for example. In fact, your student loan at DUO is not reported to your mortgage advisor. You can imagine that it is very tempting not to say that you have a student debt. However, we recommend to tell it at all times. Lying about a student debt can have unpleasant consequences. One of them is the exclusion of mortgage guarantee. This safety net ensures that your mortgage is paid by the bank in times of need, such as unemployment. Hiding your study debt therefore involves big risks.
Because there is hardly any interest on a student debt, the quick repayment is not exactly tempting. Especially not if you occasionally want to go on holiday or want to buy a private car. The disadvantage of this is that if you want to buy a house and want to take out a mortgage, only the original amount you have borrowed will be looked at. Even if you only have to pay off for a year, your entire mortgage is the victim of it. That is why first paying off your student debt before you buy a house is very attractive. But, with the new system where much more has to be borrowed to make ends meet, that is almost impossible. Make at least a good planning how much you want to pay off per month.
The much-heard myth that you can not buy a house with a study debt is not true. You can just get a mortgage with a student debt, but much less than if you did not have a student debt. It also depends on the level of your income and whether you fall under the old or new system. Through this handy calculation tool you can see exactly what your maximum mortgage with student debt is. Some people are considering leaving aside their study debt in order to get a higher mortgage. This can have nasty financial consequences. Finally, it is by far the most convenient when you first pay off your debt before you buy a house. But with the new loan system, this is going to be a difficult job. A mortgage with a student debt is therefore possible, but not ideal.