University blues

Biggestoaf

My daughter started uni this term. She and some friends are already thinking about accommodation for next year. On a recent visit we noticed that property prices are pretty low there and started to wonder if we could afford to buy a house for her to live in and have her friends pay rent to us. We have a balance of £60,000 left on the mortgage for our own house which is probably worth about £325,000 and we have an interest only buy-to-let mortgage (with a different lender) of £90,000 for a flat worth about £125,000.
We were hoping to borrow an additional £150,000 on our house mortgage to finance the purchase of a house for our daughter but our lenders were not willing to do that, particularly as we already had another mortgage. I also asked if we could borrow £30,000 to use as a deposit if we went elsewhere for a mortgage. They would do this but only if we were gifting the money to my daughter so she could take a mortgage in her own name, rather than us taking out another mortgage.
I have several questions: is it likely that my daughter, aged 19, could get a mortgage? As a student she has very little income and would be relying on rent from her friends to meet the monthly payments. I'm guessing no lender would give her £120,000 on his basis.
Should I lie to our lender and say we are gifting the £30,000 to our daughter but then go and find a mortgage for ourselves? Would this be fraud?
Is there any other way of using the equity in our house to finance the purchase of a house for our daughter that I haven't thought of?

Seanymph

We recently added a second mortgage to our home in the way you are discussing (Natwest) and they said it was nothing to do with them what we spent the money on (it was a roof for our barn in France).

Oh, and when we took out the first one last year (also Natwest) they asked (to buy the house in France) - but again said it was nothing to do with them what the money was spent on.

I'd contact a broker. We had several tell us we couldn't get funding, despite owning outright two houses (one in each of our names). We then found someone who arranged the first lending no problem at all. The issue was that OH was raising money on his house which he didn't live in (we live in mine) but isn't rented out (his son lives in it). Natwest didn't mind at all, and our broker found them - but before that a couple of brokers and our normal banks had all turned us down.

You just need someone who has the right knowledge to find you the right product from a lender who doesn't mind.