Mortgage on PhD stipend & renting rooms

pinknsparkly

Hi,

My partner and I would like to purchase a house with a value of up to £300,000. We have a deposit of £45,000 (i.e. 15%), and intend to rent out the two extra bedrooms for a total of £800/month. He is on a permanent contract earning £26,000 and I am on a funded studentship with an income of £13,863 (tax-free) per year. My studentship runs until April 2017. Following the studentship, I intend to return to the career I had prior to starting my PhD (I decided to undertake the PhD to enable my career progression), and would be on a salary of about £32,000. We are first time buyers and have no children (or plans to have any!).

How feasible do you think it is for us to get a mortgage given the above details? And any suggestions as to mortgage brokers or banks to approach?

Thanks in advance for any and all suggestions and comments!!

kingstreet

At over 6 x income, I'd say your chances are slim and none.

Lodger income won't be taken into account as you have no history of receiving it.

Sorry.

pinknsparkly

hi Kingstreet, thanks for your reply. I thought that was likely to be the case - it's just getting a little depressing edging steadily closer to 30 with no hope of ever getting on the property market round here!!

crazylady_012

Hello,
I am also a PhD student and found that a lot of banks would not accept my stipend as income. They definatly won't accept the lodger income. Good luck!!!

pinknsparkly

I thought I'd post an update in case anyone else stumbles across this thread (and it saves you the £600 broker fees it cost us to find it!).... We found a mortgage and a house and are currently in the process of paperwork checks, land searches etc :-)

The mortgage is with Bath Building Society and is called Buy For Uni. If you have at least a 20% deposit and the rent you will get from renting the rooms out covers 125% of the mortgage repayments (you can choose between interest only and repayment) then you don't need a guarantor.

If you do not have a 20% deposit or the rental yield does not cover 125% of the mortgage payment then you will need to find yourself a guarantor (or two). For deposits of <20%, property owned by the guarantors can be used as collateral instead. You can obtain a mortgage of up to 100% of the value of the property you are purchasing. For rental yields of <125% of the mortgage payments the guarantor must have sufficient income to make up this shortfall.

However, since my partner and I are not married (despite being together for 7 years and having been living together for 3 years) the mortgage and house cannot be put in his name as they're worried about the risk of us breaking up. His income is therefore not taken into account at all and he also can't be a tenant as we will be sharing a bedroom.... My stipend is also not taken into account as it is not a "proper" (i.e. taxable) income.

Limitations to the mortgage:
- you can have a MAXIMUM of four people living in the house (so that means my partner and I can have up to two lodgers. We've therefore opted for a three bed house as the price difference between a 2 and 3 bed is negligible round here)
- you can't buy an ex-council flat
- you can't buy a flat in block of flats that is more than 6 storeys high
- you have to buy a property located within a 10 mile radius of the university at which the student is registered
- the student must be a full-time student and have at least 2 years left of their studies.
- THE MAJOR LIMITATION: this mortgage was featured in a Telegraph article about two weeks after we started the application procedure. They've been so inundated with applications that they've had to temporarily withdraw the product from offer whilst they work through the back log.... But keep your eyes open and it should be available again at some point.
- sloooooooooooooow, this is probably a result of the huge number of applications, but it's taken us two months to get from applying for the product to a mortgage in principle. We've had to be super patient, mostly because we have no other option!

I really hope this helps someone get a foot on the ladder (when it comes back onto the market).

I am in turn terrified and ridiculously excited, I can't believe it's actually happening after all!

:grouphug:

Rollinghills

Do I understand correctly that you do not need any income to get this mortgage as long as you have the 20% deposit and the expected lodger income will cover 125% of the mortgage payment? Wow!

dimbo61

Very best of luck getting the mortgage and a property that the lender is happy with.
Which university do you attend ? No article 4 in place ?
Many student areas now have licence system.
Only buy two storeys house ( fire regs) and make sure both rented bedrooms are good size .
Smoke and CO alarms, good security, modern kitchen and perhaps two bathrooms.
Gas safety certificate, EPC and electrical safety certificate/inspection.