How to Get a Student Mortgage

Finding The Best Student Mortgage Deals For You

Your home may be repossessed if you do not keep up repayments on your mortgage. When The Bank Says No is a mortgage broker, and not a lender.

Looking to get a Student Mortgage? Our mortgage advisors are here to help you secure the right product for your needs, whatever your circumstances.

Your home may be repossessed if you do not keep up repayments on your mortgage. When The Bank Says No is a mortgage broker, and not a lender.

If you’re a full-time student in the UK looking for a student mortgage, look no further than When The Bank Says No. We remove the barriers and present the best options to you, as specialist mortgage brokers.

The current soaring rental costs of substandard student housing have forced many students to consider taking out mortgages to buy their own place. However, with student loans, no steady source of income, and likely limited credit history, it’s not unreasonable to assume that typically risk-averse mortgage lenders would steer clear of students.

Nevertheless, there are a few student mortgage options available in the UK for students. Work with one of our expert mortgage brokers today and we’ll find the best student mortgage deals to suit your circumstances. 

What is a student mortgage?

A student mortgage is a type of loan that students enrolled in full-time education can take out to purchase property during their studies. Each lender has its own list of stipulations for student mortgages, including deposit size and collateral options.

As such, lenders encourage different deals depending on the student’s financial circumstances. Some lenders provide student-specific mortgages, such as the Buy for Uni scheme.

Other lenders offer less specialised mortgages that are still suitable for students, such as the Joint Borrower Sole Proprietor mortgage or the Family Springboard mortgage.

However, most, if not all, lenders require student applicants to use a guarantor, which can provide additional financial security to ensure that mortgage repayments are made on time and in full.

To be eligible, a guarantor will have to meet the following criteria:

  • Is under a certain age, usually 65
  • Is a UK resident
  • Owns property in the UK
  • Has a steady source of income and a clean credit history

Which students are eligible for a student mortgage?

Student mortgages are available to students who are 18 or older and have at least two years left on their higher education course. Post-graduate students can also apply for student mortgages, as long as they’re aged between 18 and 30 with at least one year left on their course.

Some lenders may assess your application differently than that of a first-year student. However, in most cases, your affordability and income stability will determine whether or not you’re approved for a mortgage.

This also means that what you’re studying is irrelevant and will have no bearing on the outcome of your mortgage application.

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Can a mature student apply for a student mortgage?

If you’re a mature student, you’re eligible to apply for a student mortgage. Most lenders will process your loan application in the same way that they would any other student application.

However, you may have a higher chance of applying as a sole applicant, rather than with a guarantor, if you have:

  • A steady income that can cover the payments
  • Sufficient savings that can go towards a large deposit

If this isn’t the case, many lenders will only grant you a student mortgage if you have a guarantor.

Can international students apply for a student mortgage?

Mortgage lenders only consider credit history and other financial affairs, regardless of where an applicant was born. So, in theory, an international student can obtain a student mortgage for a property in the UK.

In most cases, however, many international students have difficulty satisfying some stringent requirements (see our post on UK Mortgages for Non-Residents for more info). They also have to provide numerous documents aside from their mortgage application, which can make the process of getting a student mortgage more complex and time-consuming than for UK students.

One challenge that international students almost always face is finding an eligible guarantor, as they’ll need a relative or a friend who owns the property and has permanent residency in the UK.

Student Mortgage - FAQs

Because each lender has different policies regarding income sources, the type of income accepted will vary depending on which student mortgage lender you apply to. Some lenders, for example, accept bursaries and stipends as a viable income source, while others don’t.

That said, in many cases, lenders will consider the following factors before accepting your income as a viable source:

  • How much money are you putting down as a deposit?
  • Do you have a guarantor?
  • How long will your stipend or grant last?
  • Do you have a stable second source of income?
  • How much money do you make each month?
  • How much money do you spend each month?
  • Do you have existing debt?

You need to mention and provide proof of any access to income streams, such as an allowance or a trust payout. The higher your income, the more appealing your application is to the lenders.

A student loan is borrowed money that needs to be repaid at a later date. As such, lenders don’t consider student loans as income.

Some lenders may accept a student loan as income to support mortgage repayments, but almost all lenders refuse to accept such funds as the sole source of income for mortgage applications.

Nevertheless, if you’re not using your entire student loan, you can transfer some of it into a savings account and use it to make a more attractive, larger deposit. Even so, some lenders may or may not accept your student loan as a deposit.

A student loan doesn’t appear on your credit file and doesn’t impact your credit score as negatively as a hefty credit card bill or a payday loan would.

However, some lenders may take student loans into account when assessing your affordability to determine how much you can borrow for your mortgage.

Don’t worry; there’s no reason your student loan should have a negative impact on your affordability if your finances can comfortably cover your mortgage repayments and other long-term financial commitments.

This will be at the discretion of each lender, so it’s always a good idea to consult with your mortgage lender to find out what their specific requirements are.

Nevertheless, many lenders may accept scholarship payments or stipends as income after considering your circumstances as a whole. For example, if you put down a large deposit or have a secondary stable source of income, your lender may accept your stipends as a viable income source.

On the other hand, the length of your stipend may affect your lender’s decision, as it’s set for a fixed period. So some lenders may not view it as a guaranteed source of income.

Even with a guarantor, most lenders require a minimum deposit for student mortgages, which is typically 10–15% of the property’s value. If you can put down a larger deposit than is required, lenders will consider you less of a risk.

As a result, you’re more likely to secure a mortgage and get more competitive terms. Not to mention that the more deposit money you put down, the less you’ll have to pay over monthly payments and interest.

As such, it’s recommended to save as much as you can for a deposit to obtain the best mortgage deal possible.

Nevertheless, if you don’t have the required deposit, you can work with a specialist broker to help you find lenders offering high loan-to-value (LTV) deals that suit your situation. You may even be able to secure a 100% LTV mortgage deal, which means no deposit is required.

Your monthly repayments are likely to be higher, though. You’ll also need a guarantor with an exemplary credit history and a steady income. Otherwise, this mortgage deal would be a huge risk for lenders.

First-time buyers are exempt from stamp duty, which is a tax on property transactions, as they qualify for the Stamp Duty exemption for properties worth up to £300,000.

As such, students buying their first property don’t have to pay stamp duty, even if they have a guarantor. A guarantor won’t be listed on the title deeds or have ownership rights to the property, so it doesn’t classify as a second home.

Just keep in mind that a parent will have to pay stamp duty if they buy the property as a buy-to-let for their child.

While student mortgages can be a valuable financial step for students, it’s critical to weigh all of the risks associated with this type of loan before applying.

As with any mortgage, students need to carefully assess their financial situation and ensure they can meet the monthly repayments. Otherwise, falling behind on mortgage payments can have serious consequences. For example, a guarantor may lose their property or savings if the student fails to make their monthly repayments on time.

What’s more, because the lender is taking a bigger risk, getting a 100% mortgage has higher interest rates. It also runs the risk of putting you in negative equity if house prices fall.

You’ll also need to deal with and pay for repairs and maintenance to keep the property up to a certain standard. If you rent out your rooms, you’ll need to find suitable tenants when the rooms are vacant.

Owning a property at any time in your life is a huge commitment that requires foresight and planning.

There are a few types of mortgages that are suitable for students in the UK. Each type of mortgage offers different features and benefits, so consulting with a mortgage broker, like our team of experts at When The Bank Says No, can help you choose the most suitable option.

Loan Type

Details

Buy For Uni Mortgages

As the name suggests, this mortgage type allows university students to get on the property ladder with the help of family members. While the family members will be responsible for the mortgage, the student’s name will be on the deed.

Because this type of loan is risky, it comes with stringent property stipulations, no fixed interest rate, and a typically high APR.

Guarantor Mortgages

These mortgages are designed for low-income students who can’t qualify for a mortgage on their own. The applicant will still own the property and pay the mortgage. The guarantor merely serves as financial security by taking responsibility for any repayments that the applicant is unable to make.

Joint Borrower Sole Proprietor Mortgages 

Also known as Income Boost mortgages, they allow the student to add their family members or friends to their mortgage application as joint borrowers, stretching the borrower’s affordability.

The joint borrowers won’t be on the title deeds, but they’ll share the responsibility for paying the mortgage repayments.

Family Springboard Mortgages

Similar to Buy for Uni mortgages, these mortgages require financial assistance from family members who can put up 10% of the property’s value as collateral. The difference is that in this case, the student will also need to put in 5% of the property’s value as well.

As student mortgages gain popularity in the UK, an increasing number of lenders are offering competitive first-time mortgages and guarantor mortgages to students. Although, admittedly, they’re still seen as some of the higher-risk mortgages on the market. 

With over 100 mortgage lenders in the UK, researching and comparing them to find the best one for you isn’t an easy feat.

We, however, can help you by evaluating your circumstances and recommending the best lenders for you. 

Most lenders have a list of requirements that the property must meet before it can be purchased with a student mortgage. Such criteria include the property’s size, location, and value.

Generally, student mortgage lenders require that the property:

  • Is within 10 miles of your university
  • Has 3–4 bedrooms, which the borrower can rent out
  • Has to be less than £300,000 in value

Some lenders may have additional restrictions. 

Although no lenders offer joint student mortgages, students aren’t barred from applying for a standard joint mortgage. With multiple individuals sharing mortgage responsibility, students with limited income can gain access to the property market by leveraging the financial capacity of the co-applicants.

That said, when applying for a joint mortgage, one wage must be able to comfortably cover the loan payments. As a result, the co-applicant with the higher income becomes the main earner, and their income is used to determine the applicants’ affordability.

Lenders, however, look into the credit histories and financial affairs of all parties involved in the mortgage application. So if you apply for a joint mortgage with someone who has any black marks on their credit history, it may impact your rating when lenders assess your creditworthiness.

What’s more, when you take out a joint mortgage, everyone on the contract becomes equally liable for ensuring that the monthly repayments are made in full.

Selling the property allows students to potentially benefit from any appreciation in property value and can provide financial flexibility post-graduation. Luckily, most student mortgages are short-term and interest-only, which can be helpful for students who plan to move after graduation.

Buy for Uni mortgages, for example, end when you complete your degree. So, you’ll need to either sell the property or remortgage it on a different deal as soon as you graduate.

The decision will depend on various factors like housing market conditions, long-term plans, and personal circumstances. So you should always seek mortgage advice to ensure you get the best deals.

You can talk to our friendly team to help you figure out the way forward and plan for the future. We’ll be more than glad to guide you through every step of the mortgage process.

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Student Mortgages Calculator

Supporting student mortgage applicants. 

So long as you’re a full-time student in the UK with a strong income or a guarantor who is willing to help you, then there is no reason why you shouldn’t be able to qualify for a student mortgage. 

With that said, the process is not a straightforward one, which is exactly why you need specialist advisors from When The Bank Says No to help you navigate the market and find the best deal for you. If you’re ready to get started on finding a student mortgage deal, then our advisors are on hand to help today. 

Supporting student mortgage applicants. 

If you’re worried about the mortgage process as a student, you’re not alone. But our friendly, expert advisors are just a phone call away. With expert industry knowledge and connections to mortgage lenders who specialise in more complex mortgage deals (like student mortgages), we’re uniquely placed to be able to help you today. 

We take the time to consider your circumstances carefully, before finding you the best possible student mortgage deals to suit you. With our help, the worry over your student mortgage just melts away. 

Let’s get the ball rolling. 

When you’re ready for your next application, choose When The Bank Says No to help. 

Check your credit file. 

In order for us to assess your credit history and suitability for different mortgage products, you will need to check your file. 

Let's get the ball rolling.

We can support you and help you to make yourself as attractive to banks as possible, ready for your next application!

Check your credit file.

In order for us to assess your credit history and suitability for different mortgage products, you will need to check your file.