Mortgages for university accommodation

university mortgages

Buy University Accommodation

Your son or daughter is due to start University and will be moving away from home. You have seen some of the accommodation available and don’t like the look of, or the price of, what you have seen. You therefore feel it makes more sense to use some of the capital you have aside to purchase a property which your child can then occupy whilst studying, renting rooms to other students to help cover the costs.

It sounds simple, effective and straightforward – but is it?

If you have ever tried to arrange mortgage funding for buy to let property which will be occupied by a family member you will appreciate it is not that easy – but why?

The main reason mortgage lenders have difficulty with this type of scenario is regulation. A mortgage on a property where 40% of that property is to be used as a dwelling by the borrower or an immediate family member is considered a regulated contract. A standard buy to let mortgage where the tenant is not related to the borrower is a non-regulated contract. As a result properties which are bought to be let and then occupied by family members fall into a grey area.

Mortgage solutions for University accommodation

Mortgage lenders have identified this problem within the market and products are now starting to appear which address this issue.

It is now possible to arrange a buy to let mortgage product specifically intended to purchase a property in which your student child will live whilst at University and whilst renting any spare bedrooms.

You will require a 25% deposit and the mortgage can be in the name of both the parent and the student or simply in the student’s name with a guarantee from the parent. These buy for University mortgages are underwritten based on a combination of the rental potential and the parental income. Your child can have up to 3 people sharing and paying rent – these need not be students.

Example

  • House purchase at £250,000
  • Deposit £62,500
  • Mortgage £187,500
  • Mortgage payment £731 per month
  • Two tenants paying £375 per month each = £750

In this example the other students cover all of the mortgage payments

100% Lending for University Accommodation

Parents that are prepared to have a charge registered on their main home have the additional option not to put down a cash deposit and take 100% lending on student accommodation for their child.

if you are buying for University call us now on 020 8979 9684

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