Mortgage Questions from a newbie

Jamesp00p

Hi,

Currently in my second year at uni, and I will probably be here for the next 5 years as I will be doing a postgraduate degree course . I'm spending just short of £4.5k/year on rent and me and a friend want to get a mortgage to buy a property to live in and let out to other students to recoup some of the money...

Problem is is that is there any way students with no income just living on £10k/year each can even get a mortgage/joint mortgage. I don't think so. Though we would just be able to meet the monthly mortgage payments by ourselves, as we're already jointly paying close to £1k/month on rent. With 2 tenants this would defiantly cover the mortgage repayments,poll tax and cost of utilities. But relying largely on constant residents is another issue.

Another idea that we have considered is getting one of our parents (who has >40k/yr income) to take out the mortgage for us and we would sort out the monthly payments.

Our aim is to really stop throwing our money away as rent and to make a bit of money by letting. But this could just be an unrealistic dream :rolleyes: . Any help/ideas/figures would be great. The type of houses we are looking at range from £150k-£200k.

King regards, James

lukekelly_2

Rent isn't money thrown away, it's money you spend in exchange for accommodation. It's no more throwing money away than paying for gas or groceries. Remember that with a mortgage most of your monthly sum for the first few years will be going on interest on the loan, not paying off the money you borrowed.

I'd be certain that you won't be able to obtain a mortgage yourself (I assume you don't have a substantial deposit...). Your parents may be able to buy a house for you, but that would be them taking on the risk and the investment and is more of an issue for them to consider than you.

Considering though that house prices are currently falling and there's a relatively high chance that at least one of you will want to move elsewhere when you finish your degree I'd suggest that it would a very large risk to buy a house together. What would you do if in 5 years time you wanted to move away but had a house valued £20,000 less than your mortgage? When house prices were rising rapidly people could (just about) ignore that kind of risk but that's really not an option at the moment.

Hope that helps.

RetroBob

Personally I would not buy a house with a friend. If something goes wrong you lose your friendship and/or your house. Either way... lame.

Premier_2

What you studying at uni?

sukysue

I say go for it the market can't fall forever and you will be quids in if the market rises as it will sooner rather than later. you haven't really got anything to lose have you ?

pandamonia

sukysue wrote: »

I say go for it the market can't fall forever and you will be quids in if the market rises as it will sooner rather than later. you haven't really got anything to lose have you ?

LOL

what a load of rubbish.

nothing to lose?

Jamesp00p

We were not intending for either of us to set up perminant residency in the home, just live there for x number of years, and sell at the end of university, then halve any profits or losses.

In the event you specified, we would let the house out to more students, again each paying half of the mortgage payments. If either of us needed to remain in the house that would be fine. Letting out the house to students should cover a large proportion of the monthly mortgage payments on the house, leaving both of us with very little to pay each month, maybe even surplus :T. So letting should buy us time to ride through any negative equilty due to the poor housing market proformance.


Oh, what size of a substantial deposit are we talking about?

russ21282

Me and a friend did this as we were going to uni. But we got the mortgage during our year out. It was a pretty good/risky move, but we paid very little into the house in the time we were at uni. We had 3 rooms let out bringing in about £600 a month (mortgage and bills came to about that).

One thing to think about though is what happens during summer, as most students go back home, so not much rent coming in, plus if you go your insurance may need changing for an unoccupied house.

TBH i think you have left it a bit late as you won't get a mortgage but if your relatives can sort something out, it might be a viable option.

Luckily enough, the council bought the house off us just as we were finishing uni as they were redeveloping the area. We got quite lucky as we bought in 2003 and sold at peak, so made more than double what we paid. We decided to buy another place and keep it for renting out.