Student Loan as deposit for a house?

milky_way_3

Hi all,

This was just a curiosity I wanted answering. When my parent's friend was at univeristy, she used her student loan as a deposit for a house and was able to obtain a mortgage to buy one. With this she rented out rooms to students at a good rate to pay her mortgage, and worked part time at univeristy to pay for her other things she needed as well as to start paying off her loan.

I am to start univeristy Septemebr 2016 and have been looking at ways to finance myself and wondered if this was a good idea? I have been working since I was 15 and will continue to work through univeristy and by doing this I would be able to put myself onto the property ladder and therefore not have to rent afterwards and in fact not move back in with my parents?

Many thanks,

ACG

Financially speaking would a student loan give you enough of a deposit?
What income would you have to declare to the lender for affordability purposes? (letting out the rooms would not be acceptable to many lenders - I cant think of 1 possible exception).

Do you want the hassle of being a landlord whilst at uni?

Financially speaking it could be a great idea but in a practical sense it may not be.

milky_way_3

ACG wrote: »

Financially speaking would a student loan give you enough of a deposit?
What income would you have to declare to the lender for affordability purposes? (letting out the rooms would not be acceptable to many lenders - I cant think of 1 possible exception).

Do you want the hassle of being a landlord whilst at uni?

Financially speaking it could be a great idea but in a practical sense it may not be.

Thank you very much for your reply. I guess it is true that it is impracticable and I doubt I would get a loan high enough to cover a deposit. Thanks again.

wileycat

I have a friend that did the same, used it to pay the deposit on a first home when she finished uni,

Works well if you can work it out for yourself! I spent most my student loan on accomodation and other student things!

Gorg

milky_way wrote: »

Hi all,

This was just a curiosity I wanted answering. When my parent's friend was at univeristy, she used her student loan as a deposit for a house and was able to obtain a mortgage to buy one. With this she rented out rooms to students at a good rate to pay her mortgage, and worked part time at univeristy to pay for her other things she needed as well as to start paying off her loan.

I am to start univeristy Septemebr 2016 and have been looking at ways to finance myself and wondered if this was a good idea? I have been working since I was 15 and will continue to work through univeristy and by doing this I would be able to put myself onto the property ladder and therefore not have to rent afterwards and in fact not move back in with my parents?

Many thanks,

If you're very financially savvy, depending on the amount of loan/grant you're eligible for, you may be able to save up enough to use as a house deposit after you leave university. That's what my brother has done - he got a part-time job which still gave him enough time to study, managed to pay his rent & bills, and has £16k in an ISA after three years thanks to careful managing of his loan, grants, and income (or witchcraft, I'm not sure which).

Or you could do what I did and come out of university with basically no money :P

Not sure about the plan to buy a house whilst still at university, though. A student loan would probably be an acceptable deposit, but you'd have to have enough of it (and have it before you went through the process of buying a place), and also have enough income to get the mortgage.

Laurensalive

I would concentrate on getting your degree. Just budget, and seriously watch your spending. I would leave the purchase until after uni. As you will need the money to get through your degree.

midnight_child

How long ago did your parents' friend do this?


10 years ago certain banks were offering 100% and even 125% mortgages, and they were not too fussed about asking for any proof that you actually earned the income you told them you did. However, these products disappeared around 2008 for some reason.......


About 15 years ago a mate of mine at Uni actually considered buying a terraced house in the worst area of town using his student loan. Back then you could get them for around 10-15 grand, but he eventually decided he didn't fancy living on the 3rd most crime ridden street in the country!!


MC

LplateSaver

If Milky_ways deposit and income were high enough would being a student in itself ruin their mortgage plan. In other words would they have to declare on a mortgage application that they are a student even if working?