Written by: Danny Belton - Head of Lending
Besides potentially serving as a cheaper alternative to renting, getting a mortgage as a student also means you’ll have a place to call your own both during and after your studies. Let’s explore if getting a mortgage as a student is the right option for you…
Who can get a mortgage as a student?
While there are no products explicitly labelled as ‘student mortgages’, there are mortgage products that would suit students. Most of them rely on you having reliable support from a guarantor. Typically, this would be a family member.
Those who typically take out mortgages as students are first time buyers, 18 years or older, usually have two years left on their course, and will have access to a lump sum amount of money. This could perhaps come from inheritance or a savings account that is regularly paid into which can be used for a deposit.
Whether or not your mortgage application is successful will depend on a few other factors. Ultimately, eligibility and specific requirements will vary from lender to lender, but you will need to prove your stability as a priority.
How do lenders assess students’ mortgage applications?
Lenders will carry out an affordability assessment for anyone applying for a mortgage as a student. Essentially, this is a check to ensure that you can afford your monthly repayments.
As a student applying for a mortgage, it’s unlikely that you’ll have a full-time permanent job, which means many lenders will see you as high risk. They’ll need to verify that you can afford to repay your mortgage, which could be unlikely if you’re not in full-time employment.
Lenders do vary in their treatment of student incomes, and while some may consider bursaries and stipends, others will not. Affordability, deposit amount, secondary income, future job prospects, and existing debt will all influence a lender’s decision.
It’s also worth noting that you can’t use a student loan as income for a mortgage, and must be able to provide evidence of your ability to repay both this and your mortgage.
So what does this mean for your eligibility when it comes to getting a mortgage as a student? In short, there are two main criteria you’ll need to hit to boost your chances: having a large deposit and having a mortgage guarantor.
Having a large deposit
If you’re in a position 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 with a mortgage adviser, who may have access to more specialist lenders that don’t require a large deposit. An adviser will also be able to offer guidance on whether it’s worth taking the time to save more money for a deposit, or if this may outweigh the benefits of getting on the property ladder as soon as possible.
Getting a mortgage guarantor
A mortgage guarantor is someone who will cover you financially - and pay the remaining cost of the mortgage - in the event that you’re unable to make your monthly repayments. A guarantor is usually either your parent(s), grandparents, or legal guardian, and must adhere to the following criteria:
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Not be over 65 at the time of application
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Have a property in the UK
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Be a UK resident
Your guarantor must be able to prove the minimum sustainable income to assure the lender that they’re able to meet the monthly repayments on your behalf, should you find yourself unable to. For some lenders (particularly in the case where both parents/guardians live together), it’s a requirement that both individuals act as guarantors.
Alongside security purposes, getting a mortgage as a student is also dependent on your guarantor for their credit history. As a student, and assumingly a first time buyer, you’re likely to have very minimal credit information - too little to build up a real picture of your credit history. That’s where a guarantor comes in. If you’re concerned your guarantor might have a bad credit history, there are ways they can improve their credit score.
When applying for a mortgage, you’ll need to gather credit reports and all the necessary documentation to support your eligibility, like proof of deposit or guarantor commitment.
What mortgage options are available to students?
As a student, you have various mortgage options available to you that are geared to your unique financial circumstances. These include:
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The Buy-for-Uni mortgage allows students (supported by family) to secure a 100% loan-to-value mortgage. However, bear in mind that this product does come with stringent property and location requirements
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Guarantor mortgages involve financially stable family members boosting approval prospects
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The family springboard mortgage allows family members to contribute 10% of the property value as collateral, enabling a 5% buyer deposit.
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The joint borrower, sole proprietor option permits multiple contributors with a single property owner.
Get expert mortgage advice
While you may encounter challenges regarding your affordability, income, credit history, or general proof of stability, it’s still possible for you to get a mortgage as a student.
As your circumstances may be considered more complex and unique in the eyes of the lender, you’ll want to speak to a mortgage adviser. They’ll be able to provide bespoke, tailored advice geared towards your specific need, and help you find suitable lenders willing to offer mortgages to students.
If you’re a student and think a mortgage might be right for you, please don’t hesitate to get in touch with our friendly team, who can talk you through the process from start to finish. In the meantime, you might want to work out how much you could borrow to see where you stand financially.
Download the Mortgage Advice Bureau app
Our app is a digital mortgage coach designed to help you save up, plan, and track your home buying journey – whether you’re buying your first home, or just fancy a move.
We’ll guide you through step by step to ensure you always know what’s coming up next.
Important information
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 on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
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