The cost of paying off student loans will make it harder for graduates to buy a property, research suggests.
Figures from Royal Bank of Scotland show that student loan repayments, which increase as the graduate’s pay increases, will eat up 7pc of the amount that a potential first-time buyer has left over to save for a deposit after essential bills by the age of 26. This is when most people start to think about buying a home, the bank said.
Calculations from RBS show that, although student loan debt adds only two or three months to the time it takes to save a 10pc deposit, it does make it more difficult to pay for your mortgage and still live comfortably.
Without taking student loan payments into account, a buyer with a 90pc typical first-time buyer mortgage on an average graduate income would be spending 40pc of their income on their mortgage. It increases to 44pc on average for those with a student loan and to 60pc in London.
This year’s freshers will be the first students to pay up to £9,000 a year in tuition fees under new funding arrangements for English universities. Students don’t have to pay these fees upfront, but will be given loans to cover the costs, alongside maintenance loans – of up to £5,500 a year – to pay accommodation and living expenses.