Student trying to get mortgage

abu_846

hi,
i am just finishing my first year at uni, and am trying to buy a house for the next academic year. Between me and my older sister i have a deposit of 25%, however i would be taking the mortgage out in my name. I am looking for a house worth around £250,000 with four bedrooms. I have low income and am planning on living in the house and renting out the other rooms to other students to cover mortgage repayments. My credit rating is good for my age and i have a 1k overdraft and 1k in credit cards.

i am wondering how likely it is i can get a mortgage? and what is the most appropiate mortgage to apply for.......i.e buy to let, guarantor or normal fixed mortgage.

i have looked around and i like the look of the lloyds tsb lend a hand mortgage.

Thanks
Abu

Annisele

I'm afraid I think that plan sounds like a recipe for total disaster, even in the (in my view extremely unlikely) event that you can find a lender. If you can cost it and you're sure that it will work for you and you can find a lender then great - but be very very careful with it.

You're wanting to borrow 75% of £250k, or £187,500. Interest on that at 6% would be £11,250pa ish. Even if you ignore all the other costs you're going to have as a landlord, to cover just the interest at 6% you'd need £3,750 from each of your lodgers per year - and if one or more of them didn't pay, or moved out, with a "low income" you'd be completely screwed.

You say that you want the property for next year - what about the years after that?

I'm also bit confused - if you're taking out the mortgage in your name, what has your older sister got to do with this? Is she going to be a part-owner of the property? If she is, then the mortgage will have to be in both of your names.

abu_846

hi, thanks for the reply

the rent around the area is £90-£100 a week, and i will have very low expenses so will pay my way in rent aswell.

There is fairly strong demand in the area so finding replacement tenants will be fairly easy, and a will have some remaining savings to cover any problems. If i had trouble payaing the mortgage my family would help and i would repay them when i could.

i will be in the area for another four years so it will save me paying rent and build up a asset for the future.

no, my sister is just helping me out with the deposit and i will owner.

i understand the situation is complicated but i have taken all costs into account and still find it a good investment.

However i understand it will be hard finding mortgages for me, and i am willing to be flexible i.e. getting a guarantor mortgage.

brit1234

abu_846 wrote: »

i understand the situation is complicated but i have taken all costs into account and still find it a good investment.

Will it still be a good investment as prices fall and interest rates rise? Both likely to happen.

abu_846

brit1234 wrote: »

Will it still be a good investment as prices fall and interest rates rise? Both likely to happen.

The mortgage will most likely be fixed for 3 years and after that i should be in full time employment allowing me to help with any mortgage payments.

I don't think that the price will fall, however if it does then we can review the problem when it comes.

Supreme_2

How exactly are you planning on getting a £200k mortgage as a student on 'low income'? Logic says you would need approximately £50k/yr salary to get that amount.

Thundercat_2

I don't really understand what you want from us then?

As people have already said, it's going to be extremely difficult for you to get a mortgage as the criteria are so strict at the moment - I would be really surprised if banks will touch you based on the information you've given.

People have also tried to point out some very good reasons why you really should consider what you're trying to do, but you seem hell bent on trying to go through with it anyway.

Good luck (and I mean that in a concerned way) - I think you're going to need it!

VIGILANT22

abu_846

Seek the advice of a whole of market mortgage advisor.....as this is clearly what you require

scottn

is your sister going to be staying and paying you rent too?

it is going to be extremely difficult for you to get a mortgage, my only advice, would be to try and reduce the purchase price, for example, could you buy a 3 bed property and convert one of the public rooms to an extra bedroom?

what are the elements of your income - how much in student grants, employment, other income etc?

abu_846

Supreme: i am not sure if i will get a mortgage, i am fairly sure i could get a joint mortgage as my sister is on an income of around 50k. I am looking for mortgages/banks which i should able on my own first before going down the route of a joint mortgage.

Thundercat: i know it will be hard, and i am willing to try.

VIGILANT22: i have spoken to a few mortgage advisors, some have given me similar advice to you, and some have encouraged trying because of the high deposit.

scottn: my sister is on a high salary and lives in her own house which is mortgage free. Yes i have looked into this and the house price around the university is high and the property will still minimum £220k. My income is student grant 3k, bursury 1k, job 8k, ebay/amazon around 8k and i also get a student loan of around 5.5k.

brit1234

abu_846 wrote: »

I don't think that the price will fall, however if it does then we can review the problem when it comes.

Estate agents, builders and landlords are talking up price increases.

The IMF, and the Austrian School of economics and other economic think tanks talk of big falls.

Rates and taxes are going up so factor this in as well as the widely predicted house price falls into your calculations or you will be burnt.