Student Mortgage

JakeWazza

I have searched through 10 pages of threads about this and so far found nothing that really matches my circumstances, so thought I would bite the bullet and make a thread.

Basically I am a student, and I'm looking to buy a flat instead of rent as it makes more sense when I have the deposit already. I have £25000 deposit I could put down and the flat I am looking at is £75000 so I have a 33% deposit. My part time job pays me around £6000 per year, My student loan is £6200 per year, and my friend who wants to move in with me would pay me £50 per week, so £2600 per year. This would give me a total income of £14,800 per year. I have looked round and found the mortgage payments would be around £300 per month, so £3600 per year, so could easily afford this while still managing to pay the bills, but so far everyone I talk to says I have no chance of getting a mortgage?

Why? I have even been told by mortgage brokers it isn't worth trying. Any way I can change this? I have 1 credit card with a £500 limit that I have never missed a payment on in 6 months. I payed my car insurance monthly for a year and never missed a payment and have a phone contract which I have never missed a payment on. Other than that I have no credit history. Is there any way to avoid having to rent and get a mortgage?

Thanks in advance.

somethingcorporate

Have you been to a proper broker rather than a tied bank adviser?

Have you asked a parent whether they could join you on the mortgage?

JakeWazza

somethingcorporate wrote: »

Have you been to a proper broker rather than a tied bank adviser?

Have you asked a parent whether they could join you on the mortgage?

I started in my own bank asking them, been with them years, never had a single problem other than my card being cloned once but they didn't get any money out. Never even been into my overdraft. Then I went to a financial adviser who was going to offer a whole of market search but he didn't really seem interested in taking me on, said he would give me a call but heard nothing.

I was thinking about asking my dad to join but he already has his own mortgage, he is in a good job and pretty secure but still has quite a big mortgage to shift himself.

duchy

My brother did this although he had a longer credit history than you he'd also spent time abroad . He had to use a specialist broker as the high street providers didn't want to know and it worked very well. He chose a house that was self financing (2 bedroom terrace near the uni with a layout that meant both reception rooms could be used as bedrooms so free rent for him plus three bedrooms paying the mortgage and everyone used the bathroom and kitchen). He studied for four years and then returned to London to work the house continued as a student house for a further two years with friends taking over rooms as people graduated -and each summer he'd spend two weeks decorating.....and then finally sold the house at a nice profit and bought in the area he was working in.

A lot will depend on where you are studying-Where my brother was the uni halls were vile-breeze block city . He had planned to spend his first year in halls and look for property over that year as just a possible investment but changed his mind within the first two weeks LOL -likewise where I'm currently studying (University of Kent) halls are very expensive compared with private renting so there is a ready market of students wanting to rent a room in a houseshare and prefer an all student house to avoid council tax complications.

BelleBot

I'm fairly sure your student loan doesn't count as income as it's loan after all. Plus whatever you'd get from a housemate probably won't be considered as it's not guaranteed. So that leaves you with an income of £6000 not enough to get a mortgage on.
Also what happens when you graduate? Do you have a permanent job lined up straight away or might you be stuck on a low income searching for a more suitable job for months on end like many graduates?

I'd wait until you have graduated and have permanent employment for at least 3 months, then start thinking about mortgages. That's what I've done.

Either that or buy with someone who has a better income.

ACG

My part time job pays me around £6000 per year,

This can be taken into account as its earned income.

My student loan is £6200 per year,

A loan (inc Student loan) is not an income, if anything its the complete opposite. This can not be taken into account.

and my friend who wants to move in with me would pay me £50 per week,

This is not an earned income and there is nothing to prove it will go ahead, this can not be taken into account.

This would give me a total income of £14,800 per year.

For mortgage purposes your income is £6k from your employed job.

Your not going to get a mortgage on £6k.

If you can get a relative or someone to go on the mortgage with you for a few years whilst you pass your exams and then get a full time job it could be a way around it. But your not going to get this mortgage solely in your name.

TurnUpForTheBooks_2

The OP has identified full square all that is the nonsense of mortgage lending practice in the UK.

Mortgage brokers have been clamouring over themselves for BTL business for a couple of decades now, with very risky business plans and juggled credit used as deposits, yet when a wise student puts together a sound plan like this, does in fact have a decent deposit, and a part time job, he gets told by so called professional advisers that maintenance loan £6,200 guaranteed for the next four years is not an income. Of course it is a guaranteed income - guaranteed by the government, it is intended to be spent on rent particularly, and it isn't a loan because it doesn't have to be paid back! (so they say!).

Instead of constantly churning existing business, why can't mortgage brokers do something useful and make cases for something like this ?

gazfocus

TurnUpForTheBooks wrote: »

The OP has identified full square all that is the nonsense of mortgage lending practice in the UK.

Mortgage brokers have been clamouring over themselves for BTL business for a couple of decades now, with very risky business plans and juggled credit used as deposits, yet when a wise student puts together a sound plan like this, does in fact have a decent deposit, and a part time job, he gets told by so called professional advisers that maintenance loan £6,200 guaranteed for the next four years is not an income. Of course it is a guaranteed income - guaranteed by the government, it is intended to be spent on rent particularly, and it isn't a loan because it doesn't have to be paid back! (so they say!).

Instead of constantly churning existing business, why can't mortgage brokers do something useful and make cases for something like this ?

There's a difference between a student loan (which is what the OP said he was getting) and a maintenance grant. The student loan is repayable through PAYE when the OP gets a job.

A maintenance grant probably doesn't apply here as the OP's parents likely earn more than the maximum income allowable for the OP to get it.

JakeWazza

What about if I got my friend to sign a contract as a lodger? Would this be taken into account then?

If I got my Dad to go on the Mortgage with me would this still boost my credit rating when I met the payments though? As obviously I have no intentions of missing a payment, so would like to have boosted my credit rating when I come to upgrade to a house post-grad.

I mean just from using money supermarket I have found mortgages with payments as low as £270 a month. these flats rent out for £525 a month so renting just seems ridiculous to me?

ACG

TurnUpForTheBooks wrote: »

The OP has identified full square all that is the nonsense of mortgage lending practice in the UK.

Mortgage brokers have been clamouring over themselves for BTL business for a couple of decades now, with very risky business plans and juggled credit used as deposits, yet when a wise student puts together a sound plan like this, does in fact have a decent deposit, and a part time job, he gets told by so called professional advisers that maintenance loan £6,200 guaranteed for the next four years is not an income. Of course it is a guaranteed income - guaranteed by the government, it is intended to be spent on rent particularly, and it isn't a loan because it doesn't have to be paid back! (so they say!).

Instead of constantly churning existing business, why can't mortgage brokers do something useful and make cases for something like this ?

If his mortgage was for a 4 year term there might be a way of getting it through. As the mortgage will most likely be a 20-30 year term then any lender has to look beyond that and that £6,200 is guaranteed to stop in 4 years time.

We cant make a case out of something no lender will accept. Im all for placing good quality business and finding a ways and a means but this isnt. The OP would be relying on borrowed money from the govt. He has no sure fire job to back it up with in 4 years time and hes also reliant on a mate moving in.

What happens if he cant get a job in 4 years?
What happens if his mates gets a new mrs (or Mr) and moves out and he struggles to find a new lodger?

Even if this could be placed, im not sure i would want to put my name next to it as there is no way to prove affordability beyond the 4 years.

ACG

JakeWazza wrote: »

What about if I got my friend to sign a contract as a lodger? Would this be taken into account then?
This would not work. Lodger income is not taken into account.

If I got my Dad to go on the Mortgage with me would this still boost my credit rating when I met the payments though? Yes it would as you are party to the credit agreement. It would boost yours and your dads assuming payments were kept.

I mean just from using money supermarket I have found mortgages with payments as low as £270 a month. these flats rent out for £525 a month so renting just seems ridiculous to me?
That may be the case and i agree but it lenders have their criteria and as it stands you alone do not meet it.

Its not uncommon for parents to buy a house rent it out to their kid at uni for the 4 years and some of their mates. The kid gets cheaper rent, the parents have someone trustworthy in there and make a few quid at the same time.

If you can get someone to go on the mortgage with you, there will be a way to do it im sure. But you alone isnt going to work.