Shud I get a mortgage before uni, and NOT tell the bank?!

planetmsn

I currently work full time and have enough savings and wages to get a mortgage at the moment.

I start uni in September and my parents are going to pay my monthly payments once I start uni.

Once I start uni, if I rent a flat, it would cost me £400/month, but if I take a mortgage, it would cost me £360/month. But that £360 would go towards my mortgage and not on someone else's as in the case of rent. Since my parents are going to pay this amount (whether I rent or take a mortgage - they're happy with either!), I think I should take out a mortgage, coz I could afford the regular repayments.

But banks won't give me a mortgage if I tell them I'm going to uni this September! But do they really need to know this though? If I don't tell them, they'd think I'm just a normal guy working full time and they'd assume I'd continue to work full time to make monthly repayments. And, once I get the mortgage and start uni, I'd still be making regular monthly repayments as usual, coz I would have to do the same if I had rented and not mortgaged! So there shouldn't be any problem from my side in making payments! but obviously banks won't consider this situation! So, do you think I should just keep quiet and not tell them about it? I'm not lying or anything, just not telling them the full story that I think they don't really need to know!

What should I do? Any serious advice please.

opinions4u

You should advise them of all material facts.

The £40 a month saving will disappear in other property related costs, so should not, on it's own, drive a decision to buy.

If, at the end of your course, your property has fallen in value it will become evident that renting can be a better option than buying.

I can see nothing in the economic outlook that will drive property prices up. I can see nothing in the availability of mortgage funds that will push prices up. I can see nothing in Government policy that will make a significant dent in the housing market.

Personally I wouldn't want to take the risk of graduating and having a large dose of negative equity restricting where I could look for work.

Your call.

liubeliu

So a rental on a flat is £400. Is the £360 mortgage also for a flat? If so the cost of repairs, service charge, ground rent will far exceed £40 per month.

The_J

For the love of god rent.

eh2nt

If you go down the purchase route.

is the uni that you are going to in the same area as to where you live now?

From an assessment point of view if the uni is in a diffferent part of the country to where you live now i'm sure the underwriters will ask how the move will effect your employment and then you are stuck between lying to them (which is a big no no as if the truth is discovered could result in you being CIFAS flagged which would make borrowing in the future difficult) or telling them the truth and they would say no.

I'm guessing that the £360 per month is just interest only? If so the advice above is spot on.

If it's repayment then i suppose after you leave uni you would have paid off 3/25th of the balance as well as building up a credit rating on your own.

The_J

Balance does not reduce like that. I'm assuming a mortgage of 70k over 25 years repayment, balance will be about 65k after 3 years.

It won't be interest only, no-one is stupid enough to compare rent to IO least of all someone going to university.

borkid

If you did decide to go down the mortgage route other things to consider are:
When you finish your course it is highly likely that you will be moving away from the flat.
You will need to sell the flat so factor in the costs involved.
Property doesn't sell quickly in some areas.
If you try to rent out the flat you will need to tell the mortgage company and change your mortgage at a higher rate.
Property prices may drop.
Factor in all the additional expenses involved with owning property.

If you were my child I'd advise you to wait until you've left uni or at least have a firm job offer in your final year before taking on the responsibility.

DVardysShadow

planetmsn wrote: »

i.

Once I start uni, if I rent a flat, it would cost me £400/month, but if I take a mortgage, it would cost me £360/month. But that £360 would go towards my mortgage and not on someone else's as in the case of rent. Since my parents are going to pay this amount (whether I rent or take a mortgage - they're happy with either!), I think I should take out a mortgage, coz I could afford the regular repayments.

Most of your £360/month on a mortgage will be interest, particularly in the early years while you are at uni. So you would actually be renting money rather than property. So it still goes in someone else's pocket..

This has the capability to save you about £1500 over 3 years, rent vs mortgage. But

• £1500 will be more than swallowed up by the fees for buying
• you have a load of responsibilities as owner, which you won't have as tenant
• Once you have finished uni, you can't just walk away from a property you own
• Even if you start to buy now, a purchase in September might not happen - or you may need to buy in June, leading to unplanned mortgage payments

Against this, if property values do rise over the 3 years, you stand to benefit overall.

Really, you need to sit down with pencil paper and calculator and flog through the pros and cons and then through the figures rather than base a decision on platitudes such as 'renting is dead money'

The_J

The irony is probably that they are going to do maths at university :rotfl:

TheSaint_2

I would only do it if I could guarantee that I was going to live in the same house after uni. One of my friends did it and was very happy - but she stayed in the same town and has never moved.

Otherwise as others have said, the risk of negative equity from the current market is high - at best the house will not increase in value, and should you come to sell it you may find you are unable to sell as fast as you would like.

The best solution is to keep living with your parents and try to save a larger deposit from part time jobs etc.

Dave_Ham

I think both the University and Bank should ban you on the basis of spelling should shud..

Only kidding - listen go there and enjoy it with no responsiblity. When I went to University the things that went on in the halls and rented in years 2 and 3 would tip me over the edge if I had owned the place..

There is enough time for responsibility after university.....!