Can Students Get a Mortgage?
Investing in a mortgage as a student might seem daunting, but it can be a cheaper alternative to renting and provide you with a place to call your own. Although there is no specific mortgage product called a “student mortgage,” if you’re a student with enough money for a deposit, you can apply for a mortgage. However, your application success will depend on other factors.
Affordability Assessment
Mortgage lenders will perform an affordability assessment for anyone applying for a mortgage. It is a check to ensure that you can afford your monthly repayments. As a student, it is unlikely that you have a permanent, full-time job, so many lenders will see you as a high-risk client. Therefore, to be successful in your mortgage application, you need to meet two significant criteria: having a large deposit and having a mortgage guarantor.
Large Deposit
If you’re able to put down a large deposit, lenders will consider you less of a risk. If you don’t have a large deposit, you can speak to a mortgage adviser who might have access to more specialist lenders that don’t require a large deposit. The adviser can also recommend whether it’s worth taking the time to save more money for a deposit, or if the benefits of getting on the property ladder as soon as possible outweigh it.
Mortgage Guarantor
A mortgage guarantor is someone who will cover you financially, paying the remaining cost of the mortgage deal if you’re unable to make your mortgage repayments. A guarantor is usually your parent(s), grandparents, or legal guardian, and they must meet specific criteria. They must not be over 65 at the time of application, have a property in the UK, and be a UK resident. They must also have a minimum sustainable income to prove they can cover the mortgage payments in the event of non-payment.
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 as a first-time buyer, you may have very minimal credit information. Therefore, your guarantor’s credit history comes into play in your mortgage application.
Conclusion
To summarise, if you’re a student with a deposit and a mortgage guarantor, you can apply for a mortgage. However, speaking to a mortgage adviser can provide you with more information on specialised lenders and whether saving for a deposit is worth it. Additionally, understanding the criteria for a mortgage guarantor is crucial to a successful mortgage application. Remember, a mortgage is a long-term financial commitment, so be sure to research all options and consult with professionals before making any decisions.
Sources:
| Mortgage Type | Interest Rate | Monthly Payment |
|---|---|---|
| Fixed-rate Mortgage | 3% | $1,265 |
| Adjustable-rate Mortgage (ARM) | 2.5% | $1,200 (initially) |
| Interest-only Mortgage | 4% | $1,000 (interest-only payments) |
| Reverse Mortgage | 5% | N/A (payments deferred until end of loan) |
This table compares four different types of mortgages based on their interest rates and monthly payments. The first column lists the type of mortgage, while the second column displays the interest rate for each mortgage. The third column shows the monthly payment for each mortgage, which varies depending on the type of mortgage. For example, a fixed-rate mortgage has a higher interest rate and monthly payment than an adjustable-rate mortgage, but it provides stability and predictability for the borrower. Conversely, an adjustable-rate mortgage may have a lower initial monthly payment, but the interest rate may fluctuate over time, resulting in higher payments in the future. An interest-only mortgage allows the borrower to pay only the interest on the loan, while a reverse mortgage allows the borrower to defer payments until the end of the loan. Overall, the table provides a quick and easy way to compare different types of mortgages and their associated costs.
Common questions about student mortgages
A student mortgage is a type of loan designed for students who are enrolled in a higher education program and need financing to purchase a property. It is typically offered to students who have a source of income, such as part-time work, and who plan to rent out the property to other students to help cover the cost of the mortgage.
Yes, students with little or no credit history can still get a mortgage, but they may need to provide additional information and meet certain requirements. One way to do this is by applying for a joint mortgage with a parent or other family member who has a good credit score.
The amount of deposit required for a student mortgage will depend on the lender’s specific requirements, but generally, the minimum deposit required is around 5-10% of the property’s value. However, some lenders may require a higher deposit, so it’s best to shop around and compare different lenders to find the best deal.
To apply for a student mortgage, you will typically need to provide proof of income, such as payslips or bank statements, proof of identity, such as a passport or driver’s license, and proof of enrollment in a higher education program. Additionally, you may need to provide a reference from your landlord or other relevant parties.
Yes, international students can get a student mortgage, but they may need to provide additional documentation, such as proof of residency, proof of income, and proof of enrollment in a higher education program. Additionally, they may need to meet certain visa requirements and have a UK-based guarantor or co-signer for the mortgage.
The main benefit of getting a student mortgage is that it allows students to invest in a property and build equity while they are in college or university. Additionally, if the property is rented out to other students, it can provide a source of income to help cover the cost of the mortgage. Finally, getting a student mortgage can help establish a student’s credit history and improve their chances of getting approved for other loans and credit in the future.
