If you earned a degree recently, then there’s a good chance you’re still paying off your student loan. You may think you can’t get a mortgage with a big student loan, but that’s not the case. Getting a mortgage with a student loan is both possible and common.
Not sure if your student loan will hold you back? We’ll show you what’s possible.
The NZ student debt is around $16 billion, with the average balance of close to $24,000 per student. As anyone with a student loan knows, you start making repayments once you earn over approximately $22,828 a year before tax. If you earn a salary or wages then the payments are taken out of your pay check automatically. When a lender is assessing your income, they will take those payments into account and reduce your available income accordingly.
If you have an intimidatingly high amount of student loan debt, there is some good news. Lenders treat student loans differently. The reason being the terms and conditions of student loans are very different from other forms of debt:
Deciding whether to pay off your student loan depends on your situation.
If income is the hurdle: In the instance where you have enough deposit, but your income is just shy of what lenders require, then paying off your student loan could be a good move and increase your borrowing power. So if you can pay off your student loan without losing your deposit, then you would be able to increase your available income.
If deposit is the hurdle: If your income is strong but light on savings, then putting every spare dollar towards building your deposit would be smart.
This of course is very general advice and everyone’s situation is different. The details of your circumstances matter so it’s best to talk to a mortgage broker for advice specific to you.
So, while a student loan will reduce the amount you can borrow as it reduces your calculated income, it doesn’t necessarily mean you can’t buy your own home. Even if the bank said no due to your debt or credit history, there are still other options available.
We pride ourselves in being specialists who find mortgage solutions for people with all sorts of situations and complexities. This often means exploring non bank lending options tailored to your unique circumstances. If you want to know what is possible for you, and to get expert, practical help, reach out to Platinum Mortgages today. We’re here to help!
Angela is an accredited Financial Adviser, licensed under FSP742251 and has been in the Financial Industry since 2006. Our 5-star Google reviews reflect the excellent customer experience we promise — making your home loan journey positive, stress-free, and rewarding. At Platinum Mortgages, our clients are the reason we exist — so you can be confident every step is guided by genuine care and expertise.
