Buy for Uni Mortgages for Students

Student accommodation is notoriously costly, with maintenance loans barely covering monthly rental payments. If you’re on a full time course with no spare time to make additional income, it can be tough to stay financially afloat until you earn your degree. But what if you could buy a home instead?

It sounds like a bold move, and you’re probably wondering if it’s even possible to get a mortgage as a student. The good news is, some lenders offer a specific ‘buy for uni mortgage’ for this exact scenario. Read on to find out whether this could be a good move for your future.

How do Buy for Uni mortgages work?

While there are not many mortgages for university students, a few lenders offer ‘Buy for Uni’ mortgages, sometimes known simply as student mortgages. Typically offered by building societies, these niche mortgages allow students to buy a home nearby their university with the support of their parents, or other close relatives. This allows you to borrow up to 100% of the value of the property.

In order to finance the mortgage repayments buyers are allowed to rent out the remaining rooms in their home, either to fellow students, or other tenants who are happy to share the property. The major difference between this and a standard buy-to-let mortgage is that in this case, the student owner can also reside in the property alongside the other tenants.

Because the loan is offered on an interest-only basis, this arrangement often works out to be considerably cheaper than renting student accommodation. Another major benefit is that it provides young people with an early step onto the property ladder whilst they study. At the end of their degree, they can choose whether to remortgage the property onto a capital repayment residential mortgage and keep it as their home, to become a permanent landlord, or to sell it if they wish.

Which types of students could benefit from them?

Any full-time student between the ages of 18 and 30 could potentially benefit from a Buy for Uni mortgage, but it may be more appealing to those in work placement scenarios, such as PHD students or nurses who plan to stay local to their study/workplace once their studies have ended.

Medical students and those with similarly stable career paths ahead of them may also find it easier to remortgage their home once their studies end, particularly if they already have the offer of a junior position.

Another important factor is that you need parents, grandparents or other close relatives with the means and willingness to support your mortgage application. Student mortgages are predominantly offered on a joint borrower sole proprietor (JBSP) basis, which means you’ll need someone to act as a guarantor, even though the property is in your name. In some cases it may be possible to get this type of mortgage without a guarantor if you have substantial savings and a strong credit score, but this is unlikely to apply to younger borrowers.

Begin your mortgage journey

Get Started

What is the criteria?

There are only a few lenders offering Buy for Uni mortgages, but each has their own specific criteria, so it’s a good idea to speak to a broker to help you find the most suitable lender.

While there are some variations, the following criteria typically apply:

• Applicants must be over 18 and usually under 30

• Must have at least one year of their course left - some lenders require 2 years remaining

• The property will need to be within a maximum radius of 10 miles away from the university of study. Not all lenders allow the purchase of flats or ex-local authority properties for this purpose

• A maximum occupancy will usually apply to the dwelling. This is usually 3 people in addition to the buyer, but in some cases may be 3 overall

• All rooms to be let out must be offered on an Assured Shorthold Tenancy Agreement (AST)

• Tenants can be fellow students, but do not usually have to be

Will student loans impact affordability?

If you’re getting a mortgage as a student, no, your student loan shouldn’t impact your mortgage application at all. This is because you won’t need to repay it until you graduate and get a job paying the minimum required threshold for student loan repayment.

Once you’ve graduated and begun working, getting a mortgage with a student loan is absolutely possible. Many people able to afford a mortgage are graduates, so this is a common debt which won't impact your mortgage in the same way as other debts would. However, it may reduce affordability in this scenario, as lenders will have to take your loan repayment into consideration when they calculate affordability.

If you buy whilst you’re in education, in some cases it may be possible to consolidate student loans into mortgage repayments when you remortgage your home after graduation. However, it’s important to seek expert financial advice to ensure this doesn’t mean you repay more than you need to.

Which lenders offer mortgages to students?

There are only a few specific student mortgage providers, all of which are building societies.

• Bath Building Society student mortgage is offered at up to 100% LTV on a JBSP basis. Students and parents must have 3 years worth of UK address history and permanent right to reside in the UK. They offer overpayments of up to 20% of the capital balance in year 1 and unlimited overpayments for the remainder of the initial term

• Lougborough Building Society offers Buy for Uni mortgage loans of up to £400,000 to those with at least 12 months of their course remaining. It’s also possible to purchase a property up to one year in advance of the course, with evidence of an acceptance offer. The student purchasing the property must be at least 18, must live in the property, which must be in England or Wales and within 10 miles of the relevant university. They require homes to have a maximum or 3 rooms and 3 occupants, including the buyer. For loans greater than 80% of the value of the property being purchased or if rental income does not cover the repayments, additional security, such as a guarantor will be required

• Vernon Building Society - Offers Buy for Uni mortgages of up to £400,000 on a JBSP basis only. Additional security is required for loans of 80% LTV or above. The home can be transferred to the homeowner’s sole name when the remaining mortgage is less than 80% of the property value and the borrower can demonstrate that they can afford the mortgage on their own. They allow up to 4 bedroom properties within 10 miles of the respective university and a maximum of 3 tenants.

There may be other mortgages that are suitable for students buying alongside their parents, such as Halifax family boost mortgage, or similar JBSP products, but different terms and conditions apply to these products.

How to get a Buy for Uni mortgage

As this is a complex, specialist mortgage, it’s recommended to speak with a mortgage broker who arranges Buy for Uni mortgages on a regular basis. This will help you find the most appropriate lender and ensure you get the right advice about the best use of your money.

Money Helpdesk has advisers who specialise in Buy to Uni mortgages and help students with their finances every day. Here are just a few reasons why our customers choose us:

• Our brokers specialise in Buy for Uni mortgages

• They can access exclusive rates and deals

• We are 5-star rated on leading review websites

• You can secure an agreement in principle in minutes

Ready to take advantage of a free, no-obligation chat with one of our brokers to find out how much they could help you save on your mortgage? Get started here.