Got a Student Loan? Here's How We Work Around It
A student loan doesn't stop you from buying a home. For most people, it's just one more thing to factor into the plan - and there's usually a good path forward.
Here's what you need to know.
How Banks Count Student Loans
When a bank works out how much you can borrow, they add up your existing debt repayments. Your student loan is included in that calculation, even if you're not actively thinking of it as a debt.
Based on how much you earn, a regular repayment towards your student loan gets deducted automatically from your payslip. That figure gets counted against your borrowing capacity, which can reduce how much the bank will lend you.
For some people, the impact is minor. For others - especially first home buyers where every dollar of borrowing power counts - it's worth having a strategy.
What We Can Do About It
The good news is there are a few straightforward ways to handle this.
Pay it down before you apply. If your student loan balance is relatively small, clearing it before you go to the bank can free up borrowing capacity. Sometimes putting savings toward the loan rather than the deposit actually gets you further. We can run the numbers to see which way makes more sense for you.
Check your actual balance. A $1,500 student loan can have the same impact as a $150,000 student loan and a lot of people haven't looked at their student loan in years. Log into MyIR and check what's actually there - you might be closer to paying it off than you think. That changes the conversation.
Time your application strategically. If you're a few months away from paying it off anyway, it can be worth waiting. A slightly smaller deposit with no student loan sitting there can sometimes give you better borrowing power than a bigger deposit with one still attached.
It's a Common Situation
Student loans are genuinely normal in NZ. Most people in their 20s and 30s have one, and plenty of them buy homes every year. It doesn't have to be a barrier - it just needs to be part of the plan from the start.
If you've got a student loan and you're trying to figure out where you stand, let's talk it through. I look at this stuff every day and can usually give you a pretty clear picture in one conversation.
Book a call with Adam here to learn more: https://www.mymortgage.co.nz/call-with-adam/
