7th February 2025
Find out more about making decisions about taking out a student mortgage, and being prepared for maintaining one.
For most students in full-time education, getting a mortgage on a house would be impossible - this is where student-specific mortgages come in. A Buy for Uni mortgage allows you to buy and live in a property as a student and then rent out the spare rooms to help cover the cost of your mortgage repayments. In this article we look at things you should consider before taking the plunge.
Typically, Buy for Uni mortgages are in the joint names of the student and family Members which means they are individually and jointly responsible for making the monthly mortgage payments and repaying the mortgage in full. This is due to the students limited credit history and income. It is essential to have an open and honest discussion with your family helpers about them being joint borrowers, and the responsibilities and risks that can be involved.
Researching the local property market in the area where you are planning to study is extremely important. This may involve looking at different types of properties and looking at different locations to gauge student demand, potential rental income, affordability and transport options. Using online property platforms, attending house viewings, and speaking with local estate agents can help you get an in-depth view of the market.
It is also important to think ahead about who might rent rooms in the property to help cover the mortgage payments. It's helpful to consider fellow students, friends, or acquaintances who might be interested in renting a room from you. It'll benefit you if you have a plan for your tenant selection, including criteria such as reliability, compatibility, and financial stability.
When preparing to take out a student mortgage, it is vital that you look into the responsibilities of becoming a landlord and the legal obligations that it entails including tenant rights, property maintenance, and safety standards. Researching local and national landlord-tenant laws can help you make sure you are being compliant and help you to avoid potential legal issues. It is also important that you prepare tenancy agreements, to protect you (the landlord) and your tenants. You should consider whether you are ready to take on these responsibilities, or if it would be better to use a property management service, which would be an additional monthly cost that you would have to pay.
It is important to have a plan for what to do with the property after graduation. There are three options:
If you keep the property as a rental business, you would need to speak to your lender and gain their permission. They would normally expect you to convert the loan to a buy-to-let mortgage, where the interest rate may be higher. You would also need to be happy that you have the time and ability to manage the business alongside whatever else you choose to do.
If you continue to live in the property then you could continue to rent out rooms to help pay the bills, or you could live in the property alone. Before the lender would release your parents from their commitment, you would need to demonstrate that you could afford the mortgage payments from your income at that time, and that the amount of the loan as a percentage of the property value was within the lender’s acceptable limits.
You wouldn’t need to answer these questions from the outset as your plans may change. You will also need to factor in any potential changes in the housing market or personal circumstances that could affect the property's future use.
It's extremely valuable to build a support network to help manage the responsibilities of being a student mortgage holder. It might also be helpful to involve family members, friends, or mentors who can offer you advice, guidance or even practical help like property maintenance or tenant management. You could also join student landlord groups or online communities to share experiences and gain insights from people in similar situations.
Overall, it is important that you are prepared for the responsibilities of having a student mortgage and being a landlord. It is essential to conduct thorough research, financial planning, and taking time to understand landlord responsibilities. Involve parental helpers early in the process and take your time to make sure that you are making informed decisions and setting realistic expectations.
If you’d like to find out more about Buy for Uni, drop in to one of our local branches or contact us for more information. You can also read more about Buy for Uni mortgages here.