Here at Just Mortgage Brokers, we have years of experience in helping people from all walks of life find the mortgage that’s right for them. Navigating the mortgage market can be daunting – particularly if you are a student. These days, however, increasing numbers of students are looking to purchase property while they study at college or university, rather than paying high rental fees. Here are some of the things you need to know if you are looking to get a mortgage as a student.
Can I get a mortgage as a student?
Because many students will at most only be working part-time, and therefore on a limited income, it’s often difficult to pass lenders’ affordability tests to get a mortgage. Many also struggle to save up the deposit required to buy a new home. For some students, however, parental help can be a way into home ownership. Often, this takes the form of a cash gift to help pay the deposit. There are also types of mortgages where the parents are jointly liable for the mortgage payments, either by taking out a joint mortgage, a guarantor mortgage or on a joint mortgage sole proprietor basis.
Mortgages for students
There is a variety of mortgage products on the market designed for students but, as already stated, these often require parents or other family members to be signatories to the mortgage. In practical terms, this often requires being a guarantor to the mortgage debt, which usually means part of the mortgage being secured against either cash savings or the equity available in the parental home. Some student mortgages also allow for the letting of rooms in the property to other students.
Pros and cons of student mortgages
Student mortgages can have the advantage, in some cases, of being more affordable than the equivalent rental payments. It can also be advantageous to get a foot on the property ladder at a younger age than many might normally consider. However, it is also a considerable and serious financial commitment. Securing the mortgage against parental savings or their home is also not something that should be undertaken lightly – if the mortgage payments should fall into arrears, it could not only lead to the student property being repossessed, but the parental collateral may also be seized, which could in turn seriously affect the parents’ credit rating.
Borrowing limits and interest rates
As with any mortgage, the maximum amount you can borrow on a student mortgage will be limited depending on the income being used to assess affordability. In the case of mortgages where parental collateral is used to guarantee the loan, it may sometimes be possible to borrow up to 100% of the value of the property, with no need for a deposit. Because student mortgages are generally considered by lenders to be a riskier form of lending than standard mortgages, it is common for interest rates to be higher than on an equivalent residential mortgage.
How Just Mortgage Brokers can help
Student mortgages still represent a relatively niche segment of the mortgage market, but at Just Mortgage Brokers we have access to deals from both high-street lenders and smaller, more specialised providers. If you are considering taking out a mortgage as a student, contact us today to discuss how we can help find the deal that’s right for you.