Students looking to take out a mortgage for a property are able to do so but will need to consider certain factors including income stream, which lenders are able to provide mortgages and whether the option of a guarantor is available.
Is It Possible for a Student To Get a Mortgage?
You can get a mortgage as a student and there are many providers across the UK willing to offer mortgages to students aged 18 or over. However, you should always consider your financial situation and how a mortgage may impact this.
In general, you will need to demonstrate an exemplary credit score, be able to show a source of income or employment, provide a down payment and show a low debt-to-income ratio. You may also need a co-signer or guarantor.
Those who have received an early inheritance from relatives may benefit from investing these funds into a mortgage. Additionally, those who are studying at a later stage in life (such as postgraduate or mature students) may have access to a greater amount of savings to put towards a mortgage.
Am I Eligible for a Student Mortgage?
In order to qualify for a student mortgage, you will need to meet certain criteria. The two key criteria are the following:
- Down payment – the higher the deposit that you are able to put down on a property, the more likely you are to find a lender who is able to approve your mortgage application. For this reason, it might be better to save for longer in order to have a larger deposit amount.
- Credit history – those with a better credit history will find it easier to get approved for a mortgage. It is possible that as a student you do not have a credit history; if this is the case, there are different ways you can improve your credit before making a mortgage application.
Can I Get a Student Mortgage With a Guarantor?
Applying for a mortgage with a guarantor will mean that the mortgage is more likely to be approved. However, you will need to adhere to certain guidelines. Typically, a guarantor will need to meet the following criteria:
- They are a legal guardian or direct family member
- They are a property owner
- They are a UK resident
In the case of some lenders, there may be a maximum age for the guarantor which tends to be around 75-80 years old.
Depending on the lender, there may also be a minimum deposit requirement which is usually around 15% of the property value. However, in some cases there are lower-deposit mortgages available.
Who Can Provide Student Mortgages?
There are many student mortgage providers across the UK with some of the country’s biggest financial institutions offering suitable mortgage products. Big name banks such as Halifax, Nationwide, Santander, Barclays and Virgin Money all offer student mortgages, just to name a few.
Working with a mortgage broker can help you find the best mortgage to suit your personal circumstances and could also help you to find some of the most competitive deals on the market.
Will My Student Loan Impact My Mortgage?
In some situations, your student loan may impact your eligibility for a mortgage application. However, the most important thing is demonstrating that you have a good financial track record and have sufficient income to meet repayments. Additionally, having a guarantor will make it far easier to apply for a mortgage.
If you are concerned about your student loans, or any other type of loan impacting your mortgage, there are certain things you can do to improve your chances. For example, paying off any outstanding credit card debts can help to improve your credit rating. Additionally, being able to offer a higher deposit (using savings or inheritance) can strengthen your case. Finally, the stronger your guarantor’s financial profile, the higher your chances are of being approved for a loan.
Should I Get a Student Mortgage?
There are many advantages to taking out a student mortgage. As with any type of mortgage, entering the property ladder is a life changing step that can benefit you for years to come; getting on the property ladder early will give you a great head start in life.
Depending on where you are looking to buy, a monthly mortgage repayment could work out to be far cheaper than rent and save you money in the long run.
Becoming a home-owner has great potential for the future. For example, if your property increases in value, you could even make money on it in the future either through reselling or charging rent if you choose a buy-for-uni mortgage.
However, buying a property is not a decision that should be rushed into. Becoming a property owner is a big commitment; although you will have flexibility after you finish your studies, for example renting out the property or selling it, you will need to think about this before entering a mortgage agreement.
Additionally, owning a property comes with a great level of responsibility and you will need to keep up not only with your mortgage payments but also things such as maintenance and repairs.
There is an element of risk incurred when using a guarantor for your mortgage; if you are unable to make your monthly mortgage repayments for any reason, the guarantor could risk losing their home.
