Student mortgages

It’s now becoming more popular for students to buy a property of their own while studying. The challenge is that without being in a full-time job, many lenders consider student mortgages to be high risk and often reject these applications.

Student Mortgages

It is now becoming more popular for students to buy a property of their own while studying. The challenge is that without being in a full-time job, many lenders consider student mortgages to be high risk and applications are often rejected.

Get a student mortgage though, and it could mean that you can buy a house to live in with the support of your family, and rent rooms out to other students – which in itself could cover the cost of the mortgage.

Student mortgages are usually only available with a guarantor. This is usually a student’s parent or legal guardian who will be responsible for paying the mortgage in the event that payments aren’t made on time.

Getting a mortgage as a student can mean:
With the help of family, buying a house to live in, instead of paying rent on less than good accommodation
Renting out spare rooms to other students, this income alone can often cover the mortgage monthly repayments
Having your own property to live in when you graduate, avoiding getting in the cycle of long-term renting
Taking the hassle out of accommodation while at university – as you won’t have to find new rental accommodation for each year like many students do

Loan guarantor

Student mortgages are usually only available with a guarantor. This is usually a student’s parent or legal guardian who will be responsible for paying the mortgage in the event that payments aren’t made on time.

As students are likely to have little to no credit history, lenders will often use the history of the guarantor to base the mortgage on.

Getting a student mortgage

Students looking to take out a mortgage are usually in a position where they have money they want to invest. This money is often gifted from parents or other relatives as a way to give them their inheritance early. This means they will avoid paying inheritance tax and their children will receive the money when they need it most.

Taking out a mortgage while at university or college allows young people to get on the property ladder much sooner. Once they graduate they will have a house they can live in rent free or use the value of the property to help them kick start their new career.

On the other hand, you might be a mature student or doing a post-graduate degree and have savings to put down as a deposit.

Student lets

If you’re an investor looking for a property to rent out to students then we have more information on buy-to-let mortgages.

Mortgage approval for students

Although it can sometimes be difficult for students to get mortgage approval, it’s still possible with the right lender. Choosing a broker who looks at each applicant’s circumstances individually will give you the best chance of getting approved.

Other things that will help your application include:

Your deposit amount

The more you have to put towards a deposit on your mortgage, the better your chances are at approval. This is because the more money you put in yourself, the less you will need to borrow. If you don’t have enough to put down (at least 10%) then you might want to reconsider your decision. Otherwise, you could delay your application until you have saved enough for your deposit.

Your credit score

As a first time buyer, you won’t have a history of mortgage repayments for lenders to base a decision on. Instead, they will consider your application based on other information such as phone contracts, personal loans and credit cards. If you’re looking to take out a mortgage and don’t have a credit history then it might be a good idea to look into building up your credit score first. This article outlines how you can establish a credit score.

On the other hand, if you know you have a bad credit history, then as a specialist mortgage broker we can look into your individual situation and help source a suitable lender.