Graduates in debt advised over mortgages

Julia Harris, mortgage analyst at Moneyfacts.co.uk, said that banks were waking up to the fact that while graduates may start with huge debts, they will soon start earning and will want a home in the meantime.

“With the aim of helping graduates buy their first property, a handful of mortgage lenders have launched mortgage products with terms exclusively available to graduates,” said Ms Harris.

“These offer terms to suit the financial situation many graduates find themselves in, namely young people who are likely to be high earners in the future, but with little or no savings for a deposit or set-up fees.”

Student debt levels are mounting and are set to increase even further with the introduction of top-up fees, while rising house prices are also discouraging first-time buyers.

However, mortgage lenders are now offering deals with 100 per cent loan-to-value deals or interest-only initial payments to tempt graduates to take out a mortgage.

With so many lenders now offering a mortgage to graduates in debt, Ms Harris said that people should still be cautious of borrowing beyond their means and should shop around for deals.