In an increasingly difficult-to-access property market, you may think it’s impossible to get a mortgage as a student, but you might be mistaken!
Despite the average age of first time home buyers steadily increasing, the answer to the question “can students get a mortgage?” is yes!
As a student, there are a fair few more hoops to jump through in order to get a mortgage, but as long as you are able to meet these stricter requirements, you could get approved for a student mortgage. If you can meet these requirements you can get yourself on the property ladder, and avoid dealing with competitive student housing, higher-than-ever rents for students, back and forth-ing with landlords for deposits, relying on lettings agents for repairs, and much more!
To learn more about how to get a mortgage as a student, keep reading! At Finance Rate, we offer clear breakdowns of many different financial decisions in black and white, giving you clarity on the things that matter to you.
Can students get a mortgage?
Yes, it is possible to get a mortgage as a student!
As a student, it’s unlikely that you are in full-time, permanent employment, which will affect how high-risk you are considered to be by lenders. Mortgage providers want to know you can afford your repayments, which can be difficult if you are not in full-time employment and don’t have a stable income – a situation that many students find themselves in.
However, with a few types of specialist mortgage, you may be able to buy your own home as a student.
There are several different options available to help you get a mortgage as a student. Most of these options are actually non-exclusive loans, meaning anyone can borrow using these methods. However their terms mean they are particularly well-suited to students.
Types of student mortgages in the UK
The specific student mortgage available in the UK is the buy for university scheme.
The buy-for-university scheme might be a good option for students who have strong security and wealth from their guarantors (usually your parents), but who may struggle to get a deposit together.
This mortgage is a 100% loan-to-value (LTV) mortgage (also known as a 100% mortgage or a no-deposit mortgage). The student owner will then rent out other rooms in the house to friends or other students to make up the mortgage repayments. It’s worth noting that for this type of mortgage, you cannot get a fixed rate, and interest rates are relatively high compared to traditional lending.
This type of mortgage can be a great way for families to help their children get on the property ladder in a way that is sustainable in the long-term, but it does have a long list of stipulations about the type, location, and size of the property you can buy, as well as how far you are from graduating.
Other types of mortgages that are popular with students include:
With a guarantor mortgage, you can purchase a property with the financial backing of a close family member with enough wealth to reduce risk for the lender.
With a guarantor mortgage, you own the property and pay the mortgage like any other homeowner, but your lender requires there to be a guarantor who is legally responsible for your payments if you can’t make them.
You’ll need a deposit like normal, and your guarantor will need to go through a range of thorough checks and must own a UK property to be eligible.
Guarantor mortgages are the most common way for students to buy property in the UK.
What are the requirements of a student mortgage guarantor?
The requirements of a guarantor will vary depending on your mortgage and your lender, but generally a guarantor needs to be:
- A direct family member or legal guardian
- A homeowner or property owner in the UK in their own right
- A UK resident with permanent right to residency
- Within the age and affordability requirements of your lender
- Able to prove they have a sustainable source of income or savings
- Able to prove they have a good, clean credit history
Family springboard mortgage
This type of mortgage also requires assistance from relatives who can prove themselves to be low-risk and financially stable.
With a family springboard mortgage, your relative will put a portion of the property value (for example, 10% in place of a 10% deposit) into a savings account with the lender, usually for around 5 years. You may also be required to put a smaller amount into this account too, depending on your agreement.
If you miss any mortgage payments, this money is used to make them. After the agreed-upon term is up, your relative gets their money back and you continue to pay the mortgage as normal.
Joint borrower, sole proprietor mortgage
This type of mortgage is generally aimed at first-time buyers, which the majority of students are.
With a joint borrower sole proprietor mortgage, multiple people are able to make payments on the mortgage while the property is owned by one sole proprietor.
This is a great way for family members to help cover property costs for students while also helping them get onto the property ladder to start building equity.
Student mortgage FAQs
Can I get a UK mortgage as an international student?
Yes, though it can be a bit more complicated as an international student. Most student mortgages will require a guarantor or contributor to already own property in the UK, and potentially require permanent residency from them.
Can PhD students get a mortgage?
Yes, PhD students can get a mortgage. It is often easier to get a mortgage at PhD level, since you have more evidence of good or bad credit in your history.
PhD students are also likely to be considered lower risk as they have a more consistent income, be that through a graduate teaching assistant position, research assistant position, or an academic stipend.
Can mature students get a mortgage?
Yes, mature students can get a mortgage. Like PhD students, mature students are likely to have a more accurate credit history, and are also more likely to have savings to rely on. Both of these things make mature students lower risk for lenders in general.
Can you use a student loan to apply for a mortgage?
No, you can’t use a student loan to apply for a mortgage. Student loans are not classed as income for lenders, and so aren’t eligible for covering your mortgage repayments.
What kind of property can I buy with a student mortgage?
If you’re using a guarantor, family springboard, or joint borrower, sole proprietor mortgage, you can buy whatever kind of property you like, as long as lenders will work with you on the property!
A buy-for-university scheme is slightly different and does have restrictions on the type of property you can purchase. It is best to speak to a mortgage advisor to best understand your options.
Can I get a student mortgage if I have bad credit history?
Having bad credit doesn’t mean you can’t get a mortgage. However, as a student, you are already deemed high-risk by banks, so it will be even more difficult to get a mortgage as a student with a bad credit score, unless you have a guarantor who can support you.
If you don’t have an eligible guarantor, there are specialist lenders who work with individuals with bad credit, and who work with students, but it is unlikely you’ll get a student mortgage agreement from a traditional bank with a bad credit score.
When do my parents get their money back?
Parents will get their money back after around five years with a family springboard mortgage, though this can vary depending on your lending agreement. With a family springboard mortgage, the lump sum is held in a savings account by the lender, after which the money will be returned to whoever deposited it to begin with.
Will student loans affect me buying a house?
Student loans, unlike other types of borrowing such as personal loans or car finance, don’t affect your credit, and won’t appear on your credit file. This means they have no impact on your credit score.
However, lenders will separately evaluate your student loan debt, and this may affect how much you can borrow.
Making mortgages clear with Finance Rate
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