Can you get a mortgage as a student?

If you’re in higher education and looking to invest in your future, buying a property might be a good option. Especially if you’re already tired of rental accommodation. But can you get a mortgage as a student?

The short answer is that’s it’s possible, although the criteria to meet will be more difficult than for home buyers with full time occupations. But if you’re able to successfully get a mortgage as a student, it can leave you in a great financial position by the time you graduate.

The mortgage challenges for students

Most students will tend to be younger, unlikely to have a full-time job, and have saved little for a deposit. This will make getting a mortgage more challenging, but not impossible.

A variety of providers offer specific student mortgages which mean you can still borrow for a home or property. The down side is that you’re likely to face higher interest rates.

Older or wealthier students are likely to be in an easier position, and are likely to be offered more standard mortgage options. But PhD students may be disappointed to learn that their stipend doesn’t work effectively as a proof of income, due to the fact it’s only guaranteed for a limited amount of time.

Mortgage options for students

If you’re able to put down a large deposit it gives you access to a wide range of products and deals, reduces the loan amount, and indicates you’re likely to be able to meet your repayments.

But many students aren’t likely to be in this position, and will have to rely on finding a suitable guarantor. This will be someone who owns a property in the UK, is below a certain age (normally 65), and is a UK resident. They’ll be checked to see if they have a decent credit score and can afford the repayments if you can’t.

By signing up as a guarantor, they’ll be responsible for any payments you can’t make, with their home as security. So, it needs to be someone who trusts you to meet your obligations (and you’ll have to be confident of not letting them down).

One specific option available to students is a ‘Buy-For-Uni’ mortgage, which is a buy-to-let option allowing you to buy a property and then rent out the spare rooms to help cover the cost of your repayments.  

The advantage is that you can meet your costs or even make a profit. But it also means becoming a landlord to ensure your housemates pay their rent on time, and manage the administration side of things. It might also put a dampener on student parties if you’re spending your time looking after the fittings and fixtures of your property. 

Specific lenders will also have other requirements to meet, including the time left on your course, the number of housemates, the location of your university, and the type of property you buy.

Often, you’ll need to purchase a property which has 3 or 4 bedrooms, and is within a 10-mile radius of your university campus.

How to help your student mortgage application?

The best way to improve any mortgage application, including as a student, is to improve your financial situation.

While your student loans might impact your ability to get a mortgage, your overall debt and financial situation will probably be more of an issue. Increasing your credit score by paying off credit card debts, or improving the financial situation of your guarantor will be important factors that lenders will look at.

Increasing your income is the other side of the mortgage equation. Any part-time wages and other earnings will improve your ability to borrow, and the choice of deals available. If you’re a PhD student, then if you’re also working as a student teacher, other employment or already have post-PHD work lined up, then that can all help.

Selling a house as a student or graduate.

If you’ve borrowed to own a house outright, then you may want to stay in your university town post-graduation, whether you choose employment or further studies. Or you may want to keep any rental income even if you move away for work.

But the student rental market can fluctuate a lot, and as a recent graduate you may find the job market is more unstable than you hoped. If you’re not able to go straight into employment after leaving university, the cost of a mortgage could quickly become a major problem.

And even before you leave education, you might decide that the effort of buying a property is too much on top of your studies.

National Homebuyers is able to offer a fast and competitive cash offer, and the money could be transferred into your bank account just days after completion.