Student Mortgage 19 January at 4:14PM in Mortgages & endowments 17 replies 594 views

mjdrae

Afternoon all. My daughter is about to turn 18 and will come into some money (around 10k). She's hoping to go to Uni in September and has been wondering how she can get on the property ladder using the 10k as part of a deposit but doesnt know what her options are in terms of securing the mortgage. I've seen these uni-student mortgages but not really looked into it.

My thought would be to help her with the payments....  ideally she would buy near her uni and live in it while taking on a lodger to help cover the payments.

Any advice would be much appreciated.

silvercar

Assuming your daughter doesn’t have much income of her own, it would be a question of you going on the mortgage but not the deeds. So you have 2 borrowers, one owner mortgage. There are a few lenders that will offer these mortgages. The parent needs sufficient income to afford the mortgage alongside their current commitments. 

dimbo61

This is a poor idea.
What happens if after one year at Uni your daughter wants to leave.
Buying and selling costs could well cost way more than any increase in value over 3 years.
Most students start in halls and meet friends for life.
Mental health, being a Landlord at 18.
Getting her friend/s to pay the rent each month.
Rules and regs about renting even with a lodger.
If she had £100,000 and you were mortgage free and maybe looking for a 2 bed city centre apartment the sums might work.
Let your daughter enjoy being a student and live the student life.

mjdrae

dimbo61 said:

This is a poor idea.
What happens if after one year at Uni your daughter wants to leave.
Buying and selling costs could well cost way more than any increase in value over 3 years.
Most students start in halls and meet friends for life.
Mental health, being a Landlord at 18.
Getting her friend/s to pay the rent each month.
Rules and regs about renting even with a lodger.
If she had £100,000 and you were mortgage free and maybe looking for a 2 bed city centre apartment the sums might work.
Let your daughter enjoy being a student and live the student life.

So, my 18yr old.. whose head is screwed on and wants to make something of her life is thinking about investing in proprty and getting on the ladder instead of blowing it on a car or holidays and its a poor idea....  wow.....

And who said anything about 'getting her friends' to pay the rent..... 

Bet you're a barrel of laughs on a night out.

mjdrae

silvercar said:

Assuming your daughter doesn’t have much income of her own, it would be a question of you going on the mortgage but not the deeds. So you have 2 borrowers, one owner mortgage. There are a few lenders that will offer these mortgages. The parent needs sufficient income to afford the mortgage alongside their current commitments. 

Thanks for that... no she doesnt thats correct and the idea would be that i cover the payments for her to help out.

RedFraggle

Where is she going to uni? £10k may not be much of a deposit 

mjdrae

RedFraggle said:

Where is she going to uni? £10k may not be much of a deposit 

Manchester

Tucosalamanca

I've had similar conversations with my 18yr old, who's also very sensible and is already planning ahead.

If he goes Uni in the south, no chance of flat purchase, if he goes north, it's absolutely an option (and arguably a sound idea).

However, with all the best intentions in the world, what @dimbo61 says makes a lot of sense.

Making friends and networking is a huge part of student life, by starting off living alone they're immediately detached from their peer group.
I know a few students who have really struggled with moving away from home, establishing new relationships and integrating into their new community. It's a lot to take on, even without the added pressure of a new home purchase.

What if DD doesn't like the course? It's not unheard of, and with so much learning going online, it's quite possible that she might think 'this isn't what I signed up for'.
If she doesn't settle in the added pressure of home ownership could be a huge burden? Why not leave her free for a while to confirm her direction?

Possibly stay in halls for the first year and see how it goes?
Accommodation costs usually ramp up in year two, so this might be the optimum time to purchase and she might also have found the perfect lodger by then?

My opinion, make it as straightforward and easy as possible for year one. It's a big leap, even for the most mature of 18yr olds.
Open a LISA as soon as DD turns 18. £4,000 deposit plus £1,000 bonus, repeat in next financial year.
DD has deposited 8k and now has 10k towards house purchase and has barely started Uni - I don't think that it's the worst plan?

fewcloudy

mjdrae said:

dimbo61 said:

This is a poor idea.
What happens if after one year at Uni your daughter wants to leave.
Buying and selling costs could well cost way more than any increase in value over 3 years.
Most students start in halls and meet friends for life.
Mental health, being a Landlord at 18.
Getting her friend/s to pay the rent each month.
Rules and regs about renting even with a lodger.
If she had £100,000 and you were mortgage free and maybe looking for a 2 bed city centre apartment the sums might work.
Let your daughter enjoy being a student and live the student life.

So, my 18yr old.. whose head is screwed on and wants to make something of her life is thinking about investing in proprty and getting on the ladder instead of blowing it on a car or holidays and its a poor idea....  wow.....

And who said anything about 'getting her friends' to pay the rent..... 

Bet you're a barrel of laughs on a night out.

Hi,

I work in the FE/HE sector, and based on my experience with students, and my own children, I would say this is a bad idea. Others have already said why.  But especially the peers/friendship/belonging thing cannot be underestimated.

Why does the only alternative to her/your idea have to be "blow the money on a car/holidays"? TBH, that seems like a bit of catastrophising on your part, if you don't mind me saying.

I'm not doubting the maturity of your daughter. Please encourage her to invest away, just not in property at this stage.

I don't know if she's your first or only child to go to Uni, but any other parent on here who has lived through this period of their child's life will know immediately why this is a bad idea.

mjdrae

RedFraggle said:

Where is she going to uni? £10k may not be much of a deposit 

Manchester

Tucosalamanca said:

I've had similar conversations with my 18yr old, who's also very sensible and is already planning ahead.

If he goes Uni in the south, no chance of flat purchase, if he goes north, it's absolutely an option (and arguably a sound idea).

However, with all the best intentions in the world, what @dimbo61 says makes a lot of sense.

Making friends and networking is a huge part of student life, by starting off living alone they're immediately detached from their peer group.
I know a few students who have really struggled with moving away from home, establishing new relationships and integrating into their new community. It's a lot to take on, even without the added pressure of a new home purchase.

What if DD doesn't like the course? It's not unheard of, and with so much learning going online, it's quite possible that she might think 'this isn't what I signed up for'.
If she doesn't settle in the added pressure of home ownership could be a huge burden? Why not leave her free for a while to confirm her direction?

Possibly stay in halls for the first year and see how it goes?
Accommodation costs usually ramp up in year two, so this might be the optimum time to purchase and she might also have found the perfect lodger by then?

My opinion, make it as straightforward and easy as possible for year one. It's a big leap, even for the most mature of 18yr olds.
Open a LISA as soon as DD turns 18. £4,000 deposit plus £1,000 bonus, repeat in next financial year.
DD has deposited 8k and now has 10k towards house purchase and has barely started Uni - I don't think that it's the worst plan?

Thanks for that and your's is a much more balanced view rather than telling me it's a poor idea. :-)

You are probably right with what you have said....  again thanks.

You mentioned the LISA....  so, she has 10k at her disposal??  what would you suggest she does with it all then?

silvercar

Manchester

Interesting in student terms. They tend to live in minimally maintained properties in Fallowfield and pay high rents. 5-6 bedroom houses are popular amongst students. 

Whereas city centre trendy 2 bed flats may well cost the same. Problem is that there is an over supply of flats and many struggle to rent.

If she has finished at uni, you won't want to be responsible for maintenance of the older houses and you won't want to have a trendy flat in case it sits empty for a long time. So consider whether it is worth actually buying for the length of a student course.