House purchase for student

Bluefox_2

My daughter is a first year student and I am considering buying a house for her to live in with three friends for the next two academic years. The three friends would pay rent, either to me or to her.
Would this have to be done on a buy-to-let mortgage or can my daughter and I get a 'normal' joint mortgage because she will be living there? What percentage of the value of the property could be borrowed in this case?

dander

I did this when I was a student. The house was bought in my name, and the mortgage was in my name too, but with my parents as guarantors. The calculation of how much to lend was based on their salary - after taking out their own mortgage costs etc. However, everything was in my name, so it was my responsibility to ensure payments went through, and my credit record that would have been affected by any arrears/defaults.

I'm afraid I have no idea what percentage they would allow these days - things will be very different, but I borrowed 90%.

silvercar

If you buy the house in the students name there will be no tax to pay when you sell it as it will be her main residence. Also you shouldn't have to get a BTL mortgage as it will be owner occupied.

jennifernil

We have done this for our daughter in the way stated above. Make sure you draw up some sort of agreement if you are investing capital you want to get back when the property is sold, and run it past your solicitor. Also get her to make a will. It would be a good idea for you both to have life insurance to cover the amount of the loan. The rent should be paid to her as she will own the property.Be sure to draw up proper rental agreements. With more than 3 sharing you may be involved in regulations re "house in multiple occupancy" depending on what regulations the local authority have, ring them to check. You will also need a Gas Inspection and certificate. Don't forget to allow for buying/selling costs and stamp duty. And of course furnishings. Soft furnishings/matresses must comply with fire regulations so will need to be fairly new.
Friends can quickly fall out when the cleaning rota falls apart, and this is more common than you may think!

Bluefox_2

Thanks Jennifernil, that's useful advice. Did you encounter any problems arranging the mortgage? Would you mind telling me which lender you decided to use and why. Was you daughter treated like a standard first-time buyer for the mortgage?