Student buying a house to rent?

kzzhar0

Help needed!

I am starting a year of studying and getting a student loan for the year. I also work part time.

I've been thinking about using the loan to buy a small apartment/house and then renting it out - does anybody know how this would work and whether I could do it? I am new to all of this and haven't purchased a property before so if anybody has any tips that would be great. Has anybody done this before? Any help/advice would be much appreciated.

Thanks

TBagpuss

It's possible, if you have enough for a deposit and can get a mortgage. You would bed to be clear with the mortgage lender what your plans were. If the plan is to rent out the property and live elsewhere yourself, you need a buy to let mortgage and will also need to make sure that you fully understand your obligations as a landlord.

If you are planning to live there yourself and have other students as lodgers, sharing with you, then again, you'd need to make sure that the terms of your mortgage allow this, and that you are clear about you responsibilities. depending in the figures you may have to do a tax return to declare the income from letting the room, if the amount you get is over the rent a room allowance. You'd also need to check whether you would fall withing the definition of an HMO and what licencing requirements there are in your area. I believe that a lot of councils where there is a lot of student housing do impose licencing requirements so you would need to make sure that you did your research.

Also consider long term plans. Do you anticipate continuing to live there once you finish your degree? What about timings? the current academic year has started so most students will already have accommodation, so if you are planning to live there yourself and rent out the spare room(s) then you may not be able to get any lodgers until next summer.

However, unless you have a very large deposit, or your part time job is very well paid, I would be surprised if you qualify for a mortgage. You would have to declare that the deposit was a loan,I suspect that this would be an issue for most lenders.

fairy_lights

It's a terrible idea.
For one thing, you're very unlikely to get a mortgage as a student working part time, and even if you could, your loan probably wont be enough for a deposit.
And even if it was - what would you then live on and where would you live? Assuming you could rent the flat out for enough to cover the mortgage and bills, you've still got repairs to pay for.

kzzhar0

Its just a thought. I live at home so was thinking of using my student loan as a deposit. This is just a thought for the future. It also doesn't necessarily need to be students that rent out the property.
For a buy to let mortgage I've actually had a look at would need to be a property owner already to get one so this idea may be out the window already unless I can be put on the mortgage here for 6 months beforehand. I wouldn't be living in the property at all as I live with my partner.
They don't make it very easy do they!

kzzhar0

I've just heard of people doing it before but maybe they were very rich! I'm not, I just have some savings and was going to maybe use my student loan for the deposit.

00ec25

kenzam90 wrote: »

I've just heard of people doing it before but maybe they were very rich! I'm not, I just have some savings and was going to maybe use my student loan for the deposit.

it is effectively a non starter

- as you have seen, the majority of BTL lenders require that the owner has a residential property as well as the BTL so as to "prevent" borrowers living in the BTL themselves and thereby evading the residential mortgage lending criteria based on income multiples, not rental multiples.

- the minimum property deposit is 25%

- the lender will require that you also have minimum income even though the amount you can borrow will be based on rental income multiples, not earnings. Typically the minimum income is £25,000, somewhat unlikely given your part time student job?

bob_bank_spanker

If it was easy everyone would do it

kzzhar0

Yes I've spoken with a which? advisor who let me know that I would have to be a property owner already. Apparently I can get put on my partners mortgage for 6 months and then qualify for this. I graduate next year so was hoping to do this in the next few years - not straight away. iIts just a thought for the future. We will see!

hazyjo

Student loan is a loan (clue is in the name ). Lenders won't accept a borrowed deposit.


The loan is given to you to use to live on - what do you propose you'll use if the loan was able to be used as a deposit?


You can't just 'get on a mortgage'. You have to qualify and it doesn't sound like you would.

aneary

What happens if the mortgage payer at your home loses their job? Can you afford the mortgage and the mortgage on your BTL property if there is a void?

Do you have the time to be a LL?

Also have you factored in that if you are on the mortgage (I assume the deeds too) you will have to pay the extra 3% stamp duty.

Red-Squirrel_2

kenzam90 wrote: »

How do lenders know its a borrowed deposit thought if its combined with my savings that I already have?

They will ask what the source of your deposit is. If you lie and say 'savings' when actually a lot of it is student loan, then you would be committing mortgage fraud.