Student Loans Will Hit Mortgages
Mortgage Style Debt Before the Real Mortgage
Business Secretary Vince Cable has given his approval to Lord Browne’s report on tuition fees for universities within England. Lord Browne has proposed the removal of the current cap of £3,290 to leave the door open for universities to charge whatever they like on a course by course basis. However, there is a proposal that if a university charges more than £6,000 for a course per year they would lose an amount of the fee to help cover the cost of student borrowing.
The wealthy will be able to absorb these rises, and for families earning less than £25,000 per year there will be a grant of £3,250 on top of the £3,750 they can borrow.
The concern is for all those families in between who will have to find the extra money. For these families potential fees of up to as much as £12,000 per year will be crippling.
House or university?
For many families there will be a stark choice between an education, or a home for their children. With mortgage lending restrictions the FSA are looking to introduce, high house prices, and high deposits a graduate will be in a perilous position where if they don’t find employment with a substantial salary then buying a house will be out of their grasp.
If the parents have paid for the education they will find it very difficult to raise the kind of deposit that is required now. At the moment the future of the young looks to be based on debt, even before they move onto the housing ladder.
At a guess in the coming years there will be far more deals on the market in terms of guarantor style mortgage where the parents will end up using their homes as security for the first time buyer.
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