How Can You Afford a Property After University?

For many people, leaving University is not a pleasant experience. Not only will you depart from friends and a whole lot of fun that has taken over your life for the past three years, but it will also be more than likely that you’ll need to get a serious job in order to clear your debts. Indeed, a sad factor of student life is increasingly the burden of having debt afterwards. The growth of tuition fees to around £3,000 per year in 2006 has meant larger debts for graduates.

One benefit of the new University fees system is that students no longer have to pay their fees up front. Under the old system, students had to pay £1,175 a year, which was effectively an entrance fee. The immediate cost was more apparent, as now fees are paid by the government and then repaid after graduation. They are also only repaid if the graduate is earning over £15,000 a year at a rate of 9% of earnings. This system clearly has its benefits for lower income families who struggled to pay the £1,175 required for each year of University up front. However, the burden of larger debts is certainly now much greater, and the cost of tuition alone will set the graduate back around £9,000 in later life.

A major problem that confronts graduates these days is their first step onto the property ladder. The boom in property prices has unfortunately coincided with the increase in tuition fees. The idea of taking out a huge debt in the shape of a mortgage, having had three years trying to avoid debt wherever possible, may well be a very unattractive prospect for many young people. One thing that is particularly difficult is to come up with the initial lump sum required to put on a property. It is a good idea to put as much money as possible into a deposit when acquiring a property so as to drive down interest repayments on your mortgage.

Taking out a graduate loan may often be the best option to get a lump sum after your studies have finished. While they are more expensive than student loans (which are set just above interest rates) they are often cheaper options than other high street loans. It is well worth shopping around for the best deals on graduate loans, but some banks offer good rates on personal loans, which may also be an attractive option. Alliance and Leicester are currently offering cheap loans at a rate of 7.4% on sums worth £7,500 to £15,000. ASDA Finance is also offering an excellent 6.9% on personal loans on sums of £5,000 to £25,000, and there’s nothing to pay for the first three months. Both of these options present a better rate than HSBC’s graduate loan rate.