Student mortgage?

ch3101

Hi guys,

Basically, my brother and I are both full time students but have part time jobs with a bank. We were looking at a flat to purchase as a buy to let. The flat should be ~35k so we needed to get a small mortgage.

We applied for a 5 year fixed deal with Clydesdale Bank because it looked good to us but after having a look through our bank statements, credit file etc they have declined the application on the sole premise that we are students.

Does anyone know of lenders who would accept students for this?

Joint income is 15k a year, each have 1 credit card, £500 limit, cleared every time they are used. No other financial commitments at all.

Mortgage would have been for 29k (including the fee).

Many thanks

holly_hobby

The thought process will be because the lender will assume as FT students, if your studies become more intensive/more hrs reqd on campus, you may have to give up your part time jobs, and lose your income.

Are you at Uni ? Are parents able to get involved ?

Try Bath Bld Society - whom offer Uni (student) Mortgages - http://new.bathbuildingsociety.co.uk/?page_id=1256

Hope this helps

Holly

kingstreet

83% is above the maximum loan to value set by every BTL lender I can think of.

Property value below the minimum of most BTL specialist lenders.

If you do not own and occupy your own property, a number of lenders will not want to lend to you.

Your employment status will put off others.

Finally, is the monthly rent more than 125% of the monthly mortgage interest, assuming an annual rate of 6%, as that's the kind of formula lenders use?

holly_hobby

Sorry, missed it was a BTL

The student mge I've mentioned, does permit the inclusion of lodger income, if you wanted to live in the unit yourself.

Holly

ch3101

holly_hobby wrote: »

The thought process will be because the lender will assume as FT students, if your studies become more intensive/more hrs reqd on campus, you may have to give up your part time jobs, and lose your income.

Are you at Uni ? Are parents able to get involved ?

Try Bath Bld Society - whom offer Uni (student) Mortgages - http://new.bathbuildingsociety.co.uk/?page_id=1256

Hope this helps

Holly

Ah, thanks for that. It is only a 1 bed unfortunately so couldn't live there as well.

I know, that's what we thought as well - which may happen in my masters/ my brother's diploma year. We would still be able to cover payments due to rental income and other savings we each have.

kingstreet wrote: »

83% is above the maximum loan to value set by every BTL lender I can think of.

Property value below the minimum of most BTL specialist lenders.

If you do not own and occupy your own property, a number of lenders will not want to lend to you.

Your employment status will put off others.

Finally, is the monthly rent more than 125% of the monthly mortgage interest, assuming an annual rate of 6%, as that's the kind of formula lenders use?

Rent would be 325-350. The bank said as long as the rent is >150% of the mortgage (which would have been around 170). So yes that part is satisfied.

It wasn't 83%, it was 80, I think we'd put down 7.5k and the bank would have lent is the rest.

We went for Clydesdale because they offer a minimum loan of 15k which of course supported us.

Thanks for your replies

Prothet_of_Doom

If the mortage is a buy to let, then you are not students, you are business people, and therefore the BTL should be based on the business plan you proposed, and have nothing to do with your other activities, or other ways of generating cash to live on.

Have I missed the point?

I have a work mate who owns numerous BTL's and reckons that overall his mortgages total £350K (10 student houses in Liverpool) and his equity totals £200K

He earns nowhere near enough to fund a £350K debt, but his income from the rent after the interest (profit) would be more than enough to fund the life of a student.

I'm not sure why it's relevant what else you do or earn ?

ch3101

Prothet_of_Doom wrote: »

If the mortage is a buy to let, then you are not students, you are business people, and therefore the BTL should be based on the business plan you proposed, and have nothing to do with your other activities, or other ways of generating cash to live on.

Have I missed the point?

I have a work mate who owns numerous BTL's and reckons that overall his mortgages total £350K (10 student houses in Liverpool) and his equity totals £200K

He earns nowhere near enough to fund a £350K debt, but his income from the rent after the interest (profit) would be more than enough to fund the life of a student.

I'm not sure why it's relevant what else you do or earn ?

This was my point as well but Clydesdale aren't really big on the whole BTL scene so are basing it more on our ability to cover the mortgage is there wasn't a tennant - which isn't a problem with 1250 in every month and tiny payments of 170.

We are going to have a word with the estate agent's mortgage braoker who may be able to shed some light - I believe they deal with Mortgage works mainly who are based more on BTLs.

The only reason for doing this is that we have more money lying around than we need and are planning on buying property as soon as we can - hence us trying now that we have enough money in place.

kingstreet

ch3101 wrote: »

Mortgage would have been for 29k (including the fee)

Which is 82.86% loan to value. You'll probably find the fee can't be added if it takes the case over the maximum LTV for the lender/product.

I don't know of any products for first time landlords over 75%, even if it is 80% and not 83%.

ch3101

kingstreet wrote: »

Which is 82.86% loan to value. You'll probably find the fee can't be added if it takes the case over the maximum LTV for the lender/product.

I don't know of any products for first time landlords over 75%, even if it is 80% and not 83%.

The quote was based on 36k purchase.

80% LTV 4.99% fixed for 5 years.

Our deposit would be 20% = £7200.

Adding the 999 fee we would put a deposit down of ~7400 and borrow 29600.

We can of course go to 30% deposit if it were required - Do you know of any lenders that could help here?

kingstreet

Not off the top of my head, no.

It needs work, if there is a lender out there.

ch3101

kingstreet wrote: »

Not off the top of my head, no.

It needs work, if there is a lender out there.

Okay thanks, we'll have a word with the EA's mortgage advisor and look at other options.