Buy For Uni Mortgages

by Helen Bean, 09 March 2017

With the average age of a first time buyer of Residential Property in the UK now being 37, it is perhaps hard to believe that students in full time university education, can obtain mortgage finance to enable them to purchase their first property to live in during their time at university, rather than having to rent student accommodation.

“Buy for Uni” mortgages are apparently the way forward and can allow students to borrow up to 100% of the value of the property they wish to purchase. As always, there is certain criteria surrounding this type of mortgage but here is some of the information:-

  • Loan size - Minimum £30,000, Maximum £300,000 
  • Property - Minimum property value £60,000 
  • Term - Minimum 5 years Maximum 40 years
  • Age - Minimum 18 years, no maximum subject to income at retirement
  • Repayment Types - Repayment or interest only
  • Loan to value - Up to 100%, to include fees where added available subject to conditions
  • The mortgage can be in the name of the parent and the student, or of the student on their own 
  • Mortgages in the name of the student will require a guarantee from a parent
  • The property must be within a 10 mile radius of the university attended
  • Evidence will be required of university place
  • For loans greater than 75% loan to value, additional security will be required in the form of a charge over the parental property. This means the parents may find it more difficult to raise capital against the equity in their home and in the event of default, their home may be at risk
  • Maximum total charges over additional security must not exceed 70% of its value

In addition

The lender is likely to allow the Borrower to rent a room or rooms within the property to other students thereby providing additional income which can of course be used for the mortgage repayments. Any agreed rental agreement is likely only to be for a maximum period of 1 year but renewable annually, in the same way as other student let accommodation.
One of the other conditions attaching to the offer is that the monthly mortgage payments have to be made from either the parents’ bank account or an account in the joint name of the parents and the borrower.

Advantages

One of the advantages of a purchase using this type of mortgage is that as the student is likely to be a first time buyer, they will not be liable to pay the higher level of stamp duty land tax for second home purchases, as their parents would have been had the property been purchased in their names.
Until today, I was not aware that this type of mortgage existed and despite the fact that the interest rate is slightly higher than that of a residential mortgage, the benefit to students is huge and potentially allows them to get onto the property ladder at a slightly earlier age than 37 and give them and/or their parents an income in the meantime in respect of any rooms rented to other students within the property.

Contact our Residential Conveyancing Solicitors 

If you require any further information in respect of this or any other Residential Property transaction, please contact Helen Bean on 01202 294566 or email helenbean@steeleraymond.co.uk.

Author

Helen Bean

Senior Associate
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