Student Mortgages

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There is a growing trend of students buying property while they study. The biggest obstacle is that many lenders consider student mortgages to be too risky, as the applicant is not in full-time work. As such, it takes lots of extra work to get these applications approved.

Students seeking a mortgage

If you are able to succeed in a student mortgage application, it will mean that you have a place to live, with the support of your family. You could then rent out rooms to other students, which could cover the cost of the mortgage for the duration of your studies (and beyond, if you want!).

In most cases, you will need a guarantor to get a student mortgage. This will usually be a parent or legal guardian, who will be obliged to make mortgage repayments in the event that you fall behind.

As a student, getting a mortgage can mean:

  • Buying a house to live in with the support of your family, rather than paying rent on inferior student accommodation.
  • Having other students rent spare rooms, generating an income that can cover your mortgage repayments.
  • Having a home to live in when you complete your studies, avoiding the expensive cycle of long-term renting.
  • Taking the stress out of finding accommodation for your studies – many students have to find a new place to rent each year, but you will have a consistent place to stay.

What is a guarantor?

A mortgage guarantor is almost certainly going to be needed to secure a student mortgage. In most cases, this will be the student’s parent or legal guardian. The guarantor will be legally obliged to pay the mortgage if you fall behind with your repayments.

Most students will have very little in terms of credit history. As such, lenders will typically look at the history of the guarantor as a basis for the mortgage.

Securing a student mortgage

When a student is looking to take out a mortgage, it usually means they have an amount of money that they wish to invest wisely. Often, this money is a gift from parents or other relatives – perhaps a way of giving them their inheritance early. This can be a good way to free a beneficiary from inheritance tax, and it ensures children receive that money at the time when they need it most.

If a young person is able to take out a mortgage while studying at college or university, they get a foot on the property ladder very early. When they graduate, they will have a home they can live in without paying rent, or they can use the value of that property to kickstart their career.

Alternatively, you may be a mature student or starting a post-graduate degree, with savings you can put forward for a deposit.

Student lets

For investors seeking a property, they can rent out as student accommodation, go to our page on buy-to-let mortgages.

Getting approved for a student mortgage

Though getting approval for a student mortgage is difficult, it can be done when you find the right mortgage lender. The best approach is to work with an expert adviser to help you find a lender who will look at your individual circumstances to maximise your chances of success.

Other helpful things include:

  • The deposit amount: The more money you have to put down as a deposit, the better your chances of success. This is because a larger deposit means the amount you borrow is lower. If you don’t have enough money to put down (at least 10% of the purchase price) then you may need to reconsider applying. You could delay your application and save up, then apply when you do have enough for a deposit.
  • Credit score: As a first-time buyer, there will be no history of mortgage repayments. The credit history lenders will look at will be based on things like personal loans, phone contracts and credit cards. If you have no credit history, it might be a good idea to build up your credit score before applying. There are lots of ways you can do this. If you know your credit history is bad, then the input of our expert mortgage advisers will be invaluable in helping you find a suitable lender.

Speak to a mortgage adviser today

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