Buying a house with a mortgage and student debt
Do you have student debt and are eager to buy a house? A student debt means you can get a smaller mortgage. However, it certainly doesn't have to stand in the way of buying a house. In this article, you will read all about buying a house with a mortgage and student debt. Good luck with your search for your dream home!
Go directly to:
- Can you buy a house with student debt?
- What influence does student debt have on a mortgage?
- Calculation examples under the old and new systems
- Is it wise to repay extra student debt if you want to buy a house?
- Have your maximum mortgage calculated
Can you buy a house with student debt?
Yes, it is possible to buy a house if you have student debt. You can still take out a mortgage, but the student debt does lower the maximum amount you can borrow. The mortgage lender takes into account that you need a certain amount per month for repayment of the student debt. You cannot spend that amount on your mortgage.
The standards of the Nibud determine what percentages of your gross income you are allowed to spend on mortgage payments. Mortgage lenders must adhere to these rules.
What influence does student debt have on a mortgage?
Student debt lowers the maximum amount you can borrow. How significantly your student debt affects the calculation of your maximum mortgage depends on when the debt was incurred:
- If you started studying before September 1, 2015, you fall under the 'old system'. You must repay your student debt within 15 years. For calculating your maximum mortgage in 2023, a monthly charge of 0.75% of the initial amount of your student debt (your total loan) is used.
- If you started studying after September 1, 2015, you are subject to the rules of the 'new system'. This means you can repay your student loan within 35 years. For calculating your maximum mortgage in 2023, a monthly charge of 0.35% of the initial amount of your student debt (your total loan) is used.
The monthly charge used is also known as the 'weighing factor'. This weighing factor is the percentage of the original student debt that is subtracted from the maximum monthly housing costs.
The weighing factor is higher for a student debt in the old system because it must be repaid within 15 years (a shorter period). This means you can repay less mortgage costs monthly. A student debt under the old system, therefore, has more impact on your mortgage than a student debt under the new system.
Consequences of higher interest on student debt
The weighing factor used by the mortgage lender depends on the interest you pay on your student debt. This interest is higher for debts under the old system because they must be repaid in a shorter period. The interest is rising; therefore, the weighing factor also rises. Below you can read what influence this has.
The interest on your student debt is set after you complete your studies. This interest rate is then fixed for 5 years. The interest was 0% for years. In 2023, the interest rose to 0.46% for student debts in the new system and to 1.78% for student debts in the old system.
Interest in 2024
According to DUO, the interest will rise to 2.56% in 2024. This percentage will apply to both systems. This will also influence the weighing factor mortgage lenders use.
Read more about mortgages:
Calculation examples under the old and new systems
As you now know, mortgage lenders do not calculate with the actual amount you spend monthly on your student debt. They apply a weighing factor (legally determined percentage) over your original loan.
The height of that percentage depends on the following two factors:
- Whether you fall under the old or new system
- The year you start repaying (this year determines the interest rate on your student debt)
Not started repaying yet?
Have you just graduated or stopped studying? You do not need to start repaying your student debt immediately. When you apply for a mortgage, the lender does take into account that you will repay in the future. Because the interest for that moment is not fixed yet, they calculate with a percentage slightly above the current rates. This takes into account possible interest increases on student loans.
Calculation example maximum mortgage 'old system'
Do you fall under the old system? In 2023, you pay 1.78% interest on your student debt with a repayment period of 15 years. This means a weighing factor of 0.75% is used. If you have a student debt of €30,000, the mortgage lender subtracts €225 (0.75% x 30,000) from your monthly available mortgage expenses. Suppose you can pay €1000 per month for a mortgage, then your maximum mortgage is €775.
Calculation example maximum mortgage 'new system'
Do you fall under the new system? In 2023, you pay 0.46% interest on your student debt. This means a weighing factor of 0.35% is used. With the same student debt of €30,000, the mortgage lender subtracts €105 (0.35% x 30,000) from your monthly available mortgage expenses. Your maximum mortgage is then €895 per month.
Note: your student debt is just one of the factors considered when determining your maximum loan. How much you can ultimately borrow depends on multiple factors. Think of your income, any other debts, the type of mortgage you take, and the rest of your situation.
Your student debt can result in you being able to get a few thousand to tens of thousands of euros less in a mortgage. For this reason, some people choose to repay extra student debt. You can read more about that below.
Is it wise to repay extra student debt if you want to buy a house?
Mortgage lenders calculate with the initial amount of your student debt. They do not take into account the monthly repayments you have already made. As a result, you can often borrow thousands of euros less, even if you have already repaid a (large) part.
If you repay extra on your student debt, this amount is deducted from the total amount used for calculation. When we talk about extra repayments, it does not refer to your standard monthly repayment amount, but to an extra amount.
If you repay extra, you can ask DUO to recalculate the monthly repayments. The monthly amount is then reduced, allowing you (at most banks) to borrow more. Ask your mortgage advisor which banks do or do not take extra repayments into account. Be aware: these are the costs for mortgage advice.
Good news! From January 1, 2024, a new rule will come into effect whereby the mortgage lender no longer calculates with the original amount of your student debt but with what you repay monthly. If you have repaid extra, this immediately means you can borrow more! Learn more about the new rules for mortgage loans with a student debt.
Note: do not use all your savings for extra repayments. It is important to have enough money left for paying other costs when buying a house. Think of costs for the notary and costs for a real estate agent. You cannot pay these from your mortgage.
Calculation example extra repayments
We take the same situation as in the previous calculation example under the new system.
Suppose:
- You had an original student debt of €30,000
- You have repaid €10,000 extra, so a student debt of €20,000 remains
- You have €1,000 per month available for mortgage expenses (without deducting student debt)
- In 2023, you pay 0.46% interest on your student debt
- A weighing factor of 0.35% is used
The mortgage lender now subtracts €70 (0.35% x €20,000) from your monthly available mortgage expenses. Your maximum mortgage is thus €930 per month. Without extra repayment, this was €895 per month. This saves you thousands of euros on your maximum mortgage amount.
Cabinet plans: calculating with current balance of student debt
When calculating your maximum mortgage amount, the mortgage lender calculates with the start amount of your student debt. In other words: the original amount, without considering repayments.
The cabinet wants to change this to a calculation method that uses the current balance of the student debt, instead of the originally borrowed amount. If implemented, you could borrow a higher mortgage amount. It is still unknown when the proposal will be implemented.
From January 1, 2024, this will change. From that moment, the current expenses of your student debt will be used for calculation, instead of the originally borrowed amount. If implemented, you can borrow a higher mortgage amount if you have repaid extra.
Would you like to buy a house? You significantly increase your chances with a real estate agent by your side. Sign up via Mijn Verkoopmakelaar and quickly and easily find the best real estate agents in your area. If you wish, also schedule a free meeting with a mortgage advisor. He or she will calculate how much you can borrow, taking your student debt into account. Ask all your other questions right away. Good luck!
Find a purchasing agent
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Frequently asked questions about mortgages and student debt
Can you buy a house with student debt?
Yes, you can buy a house with student debt. However, student debt does reduce the maximum amount you can borrow (if you need a mortgage).
How much influence does student debt have on your mortgage?
How heavily your student debt is weighed in calculating your maximum mortgage depends on the system you fall under. If you started studying before September 2015, you fall under the old system. If you started studying after that, you fall under the new system.
- Under the old system, you must repay your student debt within 15 years. For calculating your mortgage in 2023, a monthly charge of 0.75% x the initial amount of your student debt is deducted from your maximum mortgage costs.
- Under the new system, you must repay your student debt within 35 years. For calculating your mortgage in 2023, a monthly charge of 0.35% x the initial amount of your student debt is deducted from your maximum mortgage costs.
View our calculation examples under both systems for the differences.
Is it advisable to repay extra student debt if you want to buy a house?
Yes, it can be advisable to repay extra student debt if you want to buy a house. The mortgage lender calculates your maximum mortgage based on the initial amount of your loan. Even if you have already paid a large portion based on your monthly repayment.
If you repay extra, this amount is deducted from the total amount used in the calculation. With many banks, you can then obtain a higher mortgage. Note: not all mortgage lenders consider extra repayment.
Good to know! From January 1, 2024, a new rule will apply where the mortgage lender no longer calculates with the original amount of your student debt, but with what you repay monthly. So if you have repaid extra, it immediately means you can borrow more!
Do you get a BKR registration due to your student debt?
No, your student debt is not registered with the Credit Registration Bureau (BKR). A mortgage lender does not know whether you have student debt or not. When applying for a mortgage, the bank will ask you about any student debt. Mortgage lenders must take your debts into account when calculating your maximum mortgage.
Can the bank view my student debt?
Since October 2021, there has been a direct link between DUO and the network from which banks can extract information. Through this system, banks can directly see if you have a loan with DUO. Banks are not allowed to access this information without your permission. More and more mortgage lenders are asking for this permission. If you do not give your permission, you often cannot apply for a mortgage.
Are you allowed to conceal your student debt?
No, it is legally required to disclose your student debt when applying for a mortgage. It is also certainly not advisable to conceal a student debt:
- Firstly, you don't want the mortgage amount to be so high that you struggle with paying your monthly expenses.
- Secondly, concealing a student debt can be considered fraud. If the bank finds out that you have concealed your debt, the bank can demand the full mortgage amount. In practice, this is not often done.
- Thirdly, concealing your student debt can affect the payout of the National Mortgage Guarantee if you make use of it. The consequence can be that you are personally responsible for repaying any remaining debt.
Why does the bank calculate with the complete student debt?
The bank calculates with your complete student debt because the monthly repayment to DUO is calculated over the initial amount. This is a fixed amount over the entire term. If you make extra repayments, the monthly amount you pay back to DUO goes down. Most banks therefore take extra repayments into account when determining the maximum mortgage amount.
My partner has a student debt. Does this count in the calculation of our mortgage?
Yes, this counts towards the maximum mortgage that you can get together. Your incomes and debts are combined. The amounts are therefore added together, and you will receive a joint maximum mortgage calculation.
Do you want to buy a house on your own? In that case, your partner's student debt does not count. You bear the mortgage alone, so only your income and debts apply.