With so many different Help to Buy schemes available, and all with different terms and conditions, we explain each one so you can decide which could help you get on the property ladder.
If you’re tired of renting from lazy landlords, you might want to consider becoming your own landlord, by taking out your own mortgage as a student. Investing in a mortgage as a student is not only potentially a cheaper alternative in the long-run, but you’ll also have a place to call you own.
What is a student mortgage?
A student mortgage is a term, often simply, attributed to a mortgage taken out by a student. It’s really nothing fancy. It isn’t a specific mortgage product you can apply for.
You may have heard of some lenders offering ‘student mortgages’. These are simply ‘guarantor mortgages’. We’ll discuss everything you need to know about guarantors further down below.
Can I apply for a student mortgage?
A ‘student mortgage’, technically, doesn’t exist. However, if you’re a student, and you have enough for a house deposit, then of course you can apply for a mortgage. Whether or not your mortgage application is successful will depend on a few other factors.
Students who, typically, take out mortgages are 18 years, or older, usually have two years left on their course, and will have access to a lump sum amount of money - perhaps inheritance or a savings account that you’ve always paid into - which can be used for a deposit.
If your plan isn’t to stick around after you graduate, you can always sell your house and use the money to give you a head start in your next venture. Whether you stay in the property or move on, you’d have hopefully made a saving and given yourself an advantage by getting on the property ladder earlier than your peers.
How can I get a mortgage as a student?
Mortgage lenders will carry out what is known as an ‘affordability assessment’ for anyone making a mortgage application. This is basically a check up to ensure that you can afford your monthly mortgage repayments.
As a student applying for a mortgage, it will be unlikely that you have a full-time permanent job role, which means many lenders will see you as high risk. This is because lenders will need to verify that you can afford to repay your mortgage, which could be unlikely if you are not in full time employment.
What can you do, then, to be successful in your mortgage application? The two big criteria you need to hit are: having a large deposit and having a mortgage guarantor.
Have a large deposit
If you’re able to put down a large deposit, lenders will consider you less of a risk to lend to. Obviously, the more money you put down through a house deposit, the less you’ll have to pay back over the course of your mortgage term.
If you don’t have a large deposit, it’s not the end of the world. We recommend you speak to a mortgage adviser as they might have access to more specialist lenders that don’t require a large deposit. A mortgage adviser will also be able to advise whether it’s worth taking the time to save more money for a deposit, or if this might outweigh the benefits of getting on the property ladder as soon as possible.
Have a mortgage guarantor
A mortgage guarantor is someone who will cover you financially, and pay the remaining cost of the mortgage deal, in the event that you’re unable to make your mortgage repayments.
A guarantor is usually either your parent(s), grandparents, or legal guardian, and must adhere to the following criteria:
As your guarantor is responsible for paying the mortgage in the event that payments are not made on time, they must be able to prove they have a minimum sustainable income. For some lenders, in the case where both parents live together, it’s a requirement that they both act as guarantors.
Student mortgages are dependent on your guarantor not only for security measures, but also for their credit history. This is because as a student, and assumingly a first time buyer, you may have very minimal credit information; too little to build up a real picture of your credit history anyway. There are ways you can improve your credit score, if you’re concerned your guarantor might have a bad credit history.
You should be aware that there are different versions of a ‘guarantor mortgage’. If you’d like to find out more about mortgage guarantors, you can read our article on the topic here.
If you think a student mortgage might be right for you, please don’t hesitate to get in touch with our friendly team and they’ll be able to talk you through the process. In the meantime, you might want to work out how much you could borrow.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
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