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Mortgage Advisor & Director
Can university students get a mortgage?
With student accommodation costs running into the thousands, this can place a stressful financial burden on students and parents alike. Buy-for-uni mortgages allow students to own their own home while renting out rooms. Not only can this relieve some of the pressure associated with finding suitable accommodation for the duration of the course, but it also helps financially.
How do buy-for-uni mortgages work?
Buy for uni mortgages are effectively a guarantor mortgage.
Students can borrow up to 100% of the value of the property. However, if they are contributing less than 20% of the value, then their parents will need to use their own property as security. Alternatively, they can keep the specified amount in a savings account that they will not be able to access for a set number of years.
Are buy for uni mortgages a good idea?
If you're keen to help you child get on the property ladder sooner, buy for uni mortgages can be a good idea. If the property is a good investment in an up and coming university town, it could present a lucrative opportunity.
As a first time buyer living in the property, the student will benefit from being exempt from stamp duty, assuming the property is priced less than £300,000. For the parents, as it will be their child listed on the title deeds rather than them, second home stamp duty will not apply.
Drawbacks to a buy for uni mortgage
Being a landlord brings significant responsibility. For a student landlord at university, this means there are likely to be many distractions that could impact on studying. Moving away for home for the first time can be more than enough responsibility for many students. From finding and vetting potential tenants to managing property repairs, there is a distinct chance of parents becoming more involved than they would necessarily like to be.
There should be a clear exit strategy for when your child leaves university.
If the plan is to sell the property, the timing and costs associated with selling should be taken into consideration. It may be that the property is not enough of an investment to warrant ownership for just a handful of years.
What rates can I get on a buy for uni mortgage?
The rates that are offered for a buy for uni mortgage are not as competitive as standard buy to let mortgages and are generally in the 4.5-5% region.
How can I learn more?
As a specialist mortgage product, we would recommend engaging an experienced broker to make sure you are considering all the options and getting the best deal on your buy for uni mortgage.
At Teito, our team of experts have helped people in all situations to get the best deal possible. As a whole of market broker, we have access to specialist lenders, including those who offer buy for uni mortgages. Complete our simple online form today to get the process started, and we promise to make your mortgage journey as straightforward and stress-free as possible.
Image copyright Graham Robson
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
