Student Mortgages

Mathias_Destiny

Hello all,

I've been an avid reader of this forum and the advice as tips are invaluable but the time has come to post up and ask for help.

I'm 31 this year and having spent my years working in the motor industry I'm using my Physics backgrond to retrain in Petroleum Geology with an Msc at Aberdeen.

Now as I'm technically a student I qualify for some of these student mortgages with slightly relaxed rules to help student get on the property ladder. having never owned a property and spending thousands a year in rent it seems the obvious thing to take advantage of while I'm in the position to do so.

The rental market in Aberdeen is extortionate, with it being the Oil and gas capital of the Uk the rents reflect this and even students are paying upwards of £140pw for just a room in halls, never mind private residences.

The mortgage is basicaly a buy to let mortgage with a 100% LTV depending on type of property, rental income and area it is in. For loans over 80% a charge over a parents or others property, or the amount in cash is required as security.

I do not have much contact with my parents or family and my partner is unsure of using her property equity for this purpose. I have a small amount of savings left and a car I could possibly sell but nowhere near 20%. Are there any other legitimate ways of rasing the deposit or getting an investor on board? I know its a small amount but with the guaranteed rent and th University putting its students in each year it seems a no brainer. I simply cannot afford to rent and at least this way you will amke something out of it and have a proerty to show for it att the end with the ongoing knowledge that you will always have tenants. Hopefully it would have increased in value and that plus what I've saved could be used as a deposit on a normal buy to let. Plus I would hope to be working then too.

For completeness sake the mortgage payments on £80k at 6% ( allowing for the inevitable rise) over 30 years would be £492pm with a rental income of £800 - £900 pm or £7600 - £8800 per year allowing £2000 for maintenance. In addition my student support would be around another £13500 over the two years with the average starting salary in this industry at around £40k.

The actual rate offered was £440 fixed at 5% over 30 years. After the second year you are free to switch to any standard mortgage as you wish.

All help and advice very much apprciated.

M

dimbo61

Complete none starter I think.
You do not already own your own residential home!
You want to live in the property but get a BTL mortgage.
Not sure if Bank of Mum and Dad are onboard
You do not earn £25K plus a year
No or little deposit
Where can you buy a property for £80K in Aberdeen?
If buying and renting out student properties were only that easy.
Who has offered you a £80K mortgage at 5% with no deposit or income ?
Are you going to live in Aberdeen for the next 30 years?

Mathias_Destiny

My partner owns her own home and I put some 10% in to that.

Its not actually a buy to let mortgage but more a guarantor mortgage with Bath Building Society but there others that have given me quotes. The 5% is the tradeoff for having less than £25k income and no guarantee of tenants as you say. However the University effectively become the tenant thus guaranteeing the rent, they then sublet to the students. it could be empty for 12 months, you will still get paid. I am in the fortunate position to take advantage of this if there is a way of accessing that deposit, I can probably muster half and people haven't said no yet, I'm just concerned if they do what other options are there.

Property is expensive in Aberdeen yes, but there are a few suitable 3 and 4 bed houses around the £80k to £100k mark. They will lend anything up to £300k depending on the property and rent achievable, providing its self financing and 125% or the monthly payments. Any shortfall is on you. I would hope it increased in value as property continues to do in Aberdeen then put my saving and excess into a standard buy to let.

It's a legitamate offer if you can come up with that excess amount and I'm just looking for help and advice on it. This is not something I am too familiar with so do excuse me if I'm not getting it across correctly.

It seems an 'easy' and relatively low risk way of getting on to the property ladder.

dimbo61

http://www.ausa.org.uk/jobs/vacancy/479/

Have you seen this ?

dimbo61

Sorry looking for where you found the University page about them becoming your tenant!
Manchester Student Homes stopped doing this a few years ago and there are 3 universities in Manchester.

Mathias_Destiny

It was something that was put to me on the phone that can be done as universities do not have enough acomodation for new students. There are also other numerous companies who for their 10% will do the same, whilst the rental income goes down you do not have to worry about it.

However there is no requirement for any of this, just that the it is self financing, ie the rent is 125% and if over 80% LTV the deposit/ balance is met by whatever means.

Thank you for the link, whilst I inevitably need to find work there too, and I may have something lined up, studying and working full time, I don't think that would be possible. But hey, worth a shot, thank you.

Mathias_Destiny

Rather than just say its a non starter is there anyone on here within the profession that could offer some serious advice and direction on this taking on board the points I've raised. That would be really helpful.

Thank you

Voyager2002

Hello from Aberdeen,

I agree that rents are outrageous, and so the prospect of becoming a landlord must seem attractive. It is not clear from your post whether your plan is to get somewhere to live while studying, or to make a profitable investment. In terms of living arrangements, you might well find that living a few miles out of town (where rents are more reasonable) would be a better solution. In terms of making an investment, be aware that there is a lot that could go wrong: the cost of extracting energy from the North Sea (through Aberdeen) is at record levels, so the long-term outlook for the industry and hence Aberdeen property is not terribly good.

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Mathias_Destiny

I've just had the deal confirmed and a yield of 5-7% is likely.

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