Author: Mike Schapendonk
July 13, 2020

After the great years of living in your 10m2 room and sharing your shower, it is time for the next steps in your life. For some of us this means buying your own house, for others it means pursuing a professional career. 

During these amazing student years, lots of us built up a loan, your student loan. It is one of the cheapest loans you will ever get, lent by DUO, with a current interest rate of 0%. In the Netherlands, 53% of the students have a student loan with an average debt of 15.000 euros. The loan can be paid off in 30 years with a monthly repayment of 0.45% of the loan. If repayment fails, the debt will be cancelled after 30 years. This makes you wonder, does this loan only have advantages or are there also disadvantages?

Of course, there are some disadvantages. Like with every other loan, the maximum mortgage amount decreases. Nowadays, having a student debt can have major consequences for the maximum mortgage amount you can borrow. This does not only apply to ex-students with an extremely high student debt, but even students with a ‘modest’ debt of 15.000 euros - the average study debt - can borrow much less for an owner-occupied home as well. If you have a loan of 15.000 euros, the maximum mortgage decreases with approximately 20.000 euros. A lot of students do not have much savings and have a starting salary, this in combination with a shortage of starter homes can definitely be a problem when buying a first house or apartment.

However, there is hope! The new legislation makes it easier for students to get a mortgage. They now have 30 years to repay the loan instead of the 15 years that previously stood for this. As a result, the monthly costs are lower and people can get a higher mortgage. Another important development is that Nibud believes that the student debt should weigh a little less when applying for a mortgage. According to a report that the Ministry of Internal Affairs has presented to the House of Representatives, Nibud advises to lower the factor with which a student debt is taken into account. This factor has been mutually determined by the mortgage lenders and has been the same for six years, despite the huge fall in mortgage interest rates.

There is another problem with this loan. Imagine that your student loan is 30.000 euros and you are working for a few years, saving some money and paying off your student loan. You only have a debt of a thousand euros left and you want to get a mortgage. The bank, the mortgage lender, will just take the 30.000 euros into account, instead of the 1000 euros left because your monthly payment depends on the amount you've ever borrowed, even if there is 1 euro debt left. This worsens your position and negatively affects your situation while you have been trying to do the best thing you could. 

From all this knowledge and facts, we can conclude one thing. By quickly repaying your total amount and taking Nibud’s advice to the Ministry of the Internal Affairs into account, you can create more mortgage space and buy your dream house you were looking forward to. The student debt you have gives you disadvantages, but does not make your dreamhouse a fantasy place.