Student Properties

Can I get a mortgage to buy a student property?

If you are looking to buy a property to rent out to students, you may be considering a buy-to-let mortgage.

Student properties are a niche, and our team of advisors are experienced in securing the best mortgage deals around on student buy-to-let mortgages. As a whole-of-market broker, Teito has access to specialist lenders and mortgage offers that are not publically available.

Complete our secure online form to get the process started or keep reading to learn more. 

What are the benefits of buying a student property?

Parents
Student accommodation can be expensive, especially when multiplied over a number of years. Many parents consider a student buy-to-let mortgage to help support their children financially while presenting a long-term investment and extra income. 

Landlords
For landlords, in some ways, student lets can be more straightforward than other rental properties. Renting out to multiple tenants provides a higher level of income security (you can also ask each student to provide a guarantor), and students tend to be less demanding than other tenants. 

What will lenders be looking for a student buy-to-let mortgage?

Whether for a residential property, holiday home, or student let, buy-to-let mortgages are seen as a higher risk product in the eyes of lenders.

For this reason, you can expect to contribute more in the way of a deposit and pay higher rates on a buy-to-let mortgage than a residential mortgage. Fear not, our team of advisors are ready to help you get the best deal possible, and student buy-to-let properties can be an excellent investment. 

For buy-to-let mortgages, lenders are more concerned with the investment potential of the property than your personal finances - although you will need to meet specific criteria. They will be looking for a rental income covering at least 125% of the mortgage repayments after accounting for other expenses.

Most student properties are centred around particular locations, which will give you an idea of the average rental income to expect and inform your investment calculations. 

What do I need to consider with a student buy-to-let mortgage?

Depending upon the size and occupancy of the property, there are different considerations to take into account.

In England and Wales, a property let to three or more people from more than one household is classed as an HMO.

For five or more people, this is classed as a 'large' HMO and requires specific licenses and inspection from the local council. 

An HMO license is valid for up to five years, with the cost varying depending on location. 

As a niche category of property, the number of available mortgage providers is lower than for standard properties. HMO mortgages are a new product available for landlords, with a Loan to Value of between 60-75%.

These mortgages are not generally available on the open market, but as a whole-of-market mortgage broker, Teito can help. Complete our quick and easy online form today to start the process. 

How much deposit will I need for a student buy to let mortgage

To mitigate the increased risk of buy-to-let properties, you can expect to put down a bigger deposit for a buy to let mortgage than for a standard residential mortgage - 25% is standard. That being said, there are lenders who may stretch to 85% in certain situations.

If you can contribute a larger deposit, then you will be able to achieve better rates. 

How much can I borrow for a student buy to let mortgage?

The amount you are able to borrow is dependent on the rental yield of the property, which takes into account other properties in the area and is established by the valuer.

The rental income must cover a minimum of 125% of the mortgage interest, although for some lenders and higher risk properties you may be looking at more like 170%-180%. 

What about purpose-built student accommodation?

Purpose-built student accommodation tends to be within walking distance of universities, featuring self-contained flats and leisure amenities. They are typically marketed to investors with a guaranteed yield return.

The majority of purpose-built student accommodation cannot be financed with a standard buy-to-let mortgage; only with a commercial mortgage or cash. 

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Other considerations:

• As students can be renowned for late-night partying, as a landlord you might need to manage neighbour complaints. 
• You may find that some students create more damage to the property than other tenants, but this is not always the case, especially if they have a parent as a guarantor.
• Beware of additional requirements such as a Housing Health & Safety Rating, Energy Performance Certificate and annual gas check certificate. 

Can I use my personal income to borrow more on a student buy-to-let property?

Known as 'top-slicing', using your personal income to cover any rental shortfalls is possible providing you can prove you can afford to do so.  

How much will I pay in fees on a student buy-to-let?

Generally speaking, you can expect to pay more in the way of fees for a student buy-to-let than for a residential mortgage - up to 3% in some cases. 

Can I let a student house to a family member?

As your mortgage lender will expect your rental income to meet at least 125% of the mortgage repayment cost, letting to a family member at a reduced rent might not be the best idea unless you can charge the other tenants more to compensate.

Lenders have been cautious about family buy-to-let arrangements in the past, but there are a few providers who are now offering relevant mortgage products.  

Contact one of our advisors who will be able to help you learn about the new 'family buy-to-let' mortgages. 

How can I learn more?

Our team of experienced mortgage advisors have helped many people like you to get the best deal on their student buy-to-let mortgage. Complete our simple online form today to get started.

Image copyright Graham Robson