FTB and PhD student - Any advice would be great!

Gina

Hi everyone,

My situation is a little bit complicated but I'll try and explain it as best as I can and will be so greatful if anyone can advise me.

I've been offered a PhD at my current university which will pay £13000 a year but I won't have to pay tax on this or council tax on a property so I will actually have a fairly good wage. Do mortgage lenders take these considerations into account when lending, because obviously for other people tax and council tax will take a huge chunk out of their wages?

I'm looking to possibly buy a house close to the university as the house prices are really cheap here and it'll probably cost me about the same to rent. For example the house I'm looking at is a two bed town house for £115000, but I reckon I could probably get it for around £105000 because it's been on the market for a while. At the moment (finishing my undergrad degree) I'm renting a one bed flat for £500 per month.

As the PhD is for 3 years I'd rather not rent if I have have my own place for only slightly more money. I know some people may say that it's stupid because the house prices will fall, but I'm fed up of living in grotty student housing and I'd really like somewhere that I could make my own. Also I was thinking that after the PhD (if I don't end up living in the area) I could rent it out to students so that it could nearly pay for itself, so if the house prices eventually rise again I shouldn't have lost anything.

I terms of money I already have £15000 saved up for a deposit, but I'm unsure if anyone would even consider giving me a mortgage because £13000/yr looks so low on paper. I have worked out that I can afford around £570 a month easily on repayments (I'm used to living off around £4500 a year!) and perhaps put a little more aside each month. Therefore I was considering an offset repayment mortage which will consider my current account balance such as First Direct. I also do matched betting and will probably stooze so I might have a bit of extra money lying around which I thought I might as well use. My mum has also said she would be willing to be named on the mortgage, she earns around £14000/yr but has a joint mortgage of her own to pay although this is only around a third of the value of her house.

I'm sorry the post is so long, but this may influence whether I decide to accept the PhD or not, I'm really fed up of living in student housing, it's so depressing!

Thank you so much already for all the useful posts in the forum and for any help you might be able to give me.

Gina x

poppy10_2

You could probably borrow £52k max.

[Deleted User]

I used the calculator on i-resign.com to work out a fictional 'wage' for you, to imagine you were paying tax and council tax (calling it £100 a month).. you would have a salary of £18,400

Now, if you imagined 4x fictional salary + £15k deposit = £88.6k max house price

Sorry! PhD students just don't earn enough on their own to buy houses

Gina

Thanks for your help. Halifax's online calculator seem to think I can borrow up to £86000 based on the fictional wage you gave, but I guess they probably won't on the actual wage.

Reds-on-Sea

Gina wrote: »

Thanks for your help. Halifax's online calculator seem to think I can borrow up to £86000 based on the fictional wage you gave, but I guess they probably won't on the actual wage.

well if you can borrow £86k and £15 deposit = £101k you might be there in a few months if you keep saving? bear in mind all the other costs that go along with buying a house too though - solicitors fees etc.

jamtart6

Its all well and good with the "fictional" wage, but many lenders won't touch PhD students! Which reduces the number willing to lend, therefore probably not as many good deals.

Its unfair but the "fictional" wage isn't taken into account, and many won't even consider your bursary to be a "guaranteed income" because it is only for 3 years.

One thing on your side is that you are at the start of 3 years of employment so it may be better, but come to your last year and try todo this and no one will touch you...believe me!! .... They completely disregard the fact you should be earning at least £30k when you finish... such is life

However, its not all doom, some lenders will give you amortgage, generally your bank is a good one to go to if you have been with them a while..and I'm sure Halifax do consider PhD students. I spoke to several mortgage advisors, one of which said we can make you the fictional wage...the other one (a friend) warned me against this as its not technically above board.

The other problem is you are on your own. Several couples have both been doing PhDs and seem to not have too many problems, but even less places would consider me given that I hadn't got a partner

My advice is see a few mortgage advisors from different places and see what they have to say. The lenders with Countrywide/Beresford Adams definitely wont consider it, so don't bother

Gina

Thanks reds-on-sea I have thought about the other costs and have a bit more saved up than the 15k to cover those.

Thanks jamtart, I'm gonna go see a mortage advisor soon but I won't get my hopes up too much!

happybroker

Hi Gina,

Do you need to rent in studentsville? Students pay over the odds usually.

Could you not rent privately and get somewhere more pleasant? Certainly most uni's are near city centres and they tend to have a real glut of good accomodation to let, the higher the supply, the lower the rent as a rule.

I hope you get what you want but i can't think of a lender off the top of my head who accepts bursaries or educational grants as an income.

Countrywide work from a limited panel of lenders, if you are going to see a whole of market broker give them a ring before you are due to see them and explain the situation to them fully and they can do a bit of research for you to try and avoid you wasting your time.

You sound like you like to save money if you have managed to save this much whilst being a student, amazing frankly, you could consider saving more and then getting a better deal when your PHD ends.

Good luck