Can a Student Get a Mortgage in Birmingham?

Can a Student Get a Mortgage in Birmingham?

Student mortgage advice in Birmingham

During your university years, you will gain independence, freedom but also get the realisation that the experience costs a lot of money! Not only will you have course fees and accommodation to pay for, you will also want to use your money to go out and enjoy yourself.

Do you miss the days when university was free?

Living as a student tenant can go one of two ways, you can either get a great landlord that looks after you and your housemates and sorts your repairs on time etc., or you will get a landlord that never replies to your emails and texts and leaves you with a broken washing machine for over 2 weeks! Unfortunately, more often than not, it is example B that most people are faced with!

This can be frustrating when you are paying so much for your monthly rent and getting nothing back from it. Where does this leave you then? You could accept the fact that this is student life and how you will be treated by landlords, or you could become your own landlord…

Yes, this can be made possible by taking out a student mortgage on your property. It will not only save you money in the short term but also years and years further down the line!

Why should I get a student mortgage in Birmingham?

If you take out a student mortgage, you will save money on your accommodation costs and you will also be getting your foot on the property ladder. As you can imagine, you are required to make a huge investment in order to take out a student mortgage. Usually, it is those studying their third year at university looking to stay on board for their masters/PhD who take out a student mortgage. This is because they are going to be living in student accommodation for another 2-3 years, and rather them paying a landlord, they decided to take out a mortgage and get paid themself.

The bonus of taking out a student mortgage is that after you have finished your course, you will still own the property. Whether you choose to remain living inside of the property or you choose to let it out to other students, it is your choice!

After years of living within the property, it is more than likely that you have built up quite a bit of equity in the property. You could withdraw some of this equity to fund a deposit for a new home. If you are happy living inside of the property, you could still withdraw equity and treat yourself to a holiday, a new car… it’s up to you! Remember, this could benefit you both short-term and long-term.

How can a student get a mortgage?

To qualify for a student mortgage, you will have to meet strict requirements. The process is not as straightforward as the regular mortgage process.

As a mortgage broker in Birmingham, when we come across a customer looking to take out a student mortgage, we will often find that they have already been saving for a deposit. This is because, if you don’t have a deposit at the ready, it is unlikely that you’ll be able to progress much further in the process.

You will not be able to start your mortgage process if you approach a mortgage broker in Birmingham with a loan as your deposit; you would be accountable for 3 loans: your new loan that covered the deposit, your mortgage, and course costs.

When we refer to ‘deposit in place’, we are talking about savings, a lifetime ISA or even gifted deposits. Some older applicants may have always had plans to take out a student mortgage so that they don’t have to deal with landlords and renting.

The most important thing about student mortgages is that you will need to have a source of income. Most lenders will require you to have a full-time job alongside your studies in order to accept your application. Depending on your income, you may be able to take one out with a part-time job. Borrowers with a stable full-time position will appear much more reliable to a lender.

How to make yourself reliable

Reliability is the key to getting a mortgage. Lenders need to know that you are going to meet your mortgage payments each month.

There are many different ways to show your reliability as a student looking to take out a mortgage:

Larger deposit – Increasing your initial deposit reduces the total amount that you need to borrow, which will also decrease monthly mortgage payments.

Utilising a government scheme – Taking advantage of a government-led scheme such as the ‘Own Your Home’ scheme could allow you to access a larger deposit. For example, the Help to Buy scheme can allow you to increase your overall deposit to 25% and the Shared Ownership scheme lets you purchase a share in a property. Take a look at the government Own Your Home website to learn more about the schemes available.

Have an agreement in principle ready – Having an AIP in place could potentially give your mortgage application a boost as it proves that a lender has already said that they’re willing to let you borrow from them. This does however rely on you providing evidence of your income and credit history.

Here are just a few pointers, and some may not benefit you as much as others. If you are wanting further advice on student mortgages, you should get in touch with one of our mortgage advisors in Birmingham – they would be more than happy to try and help you through your process and answer your questions.

What type of property can I buy with a student mortgage in Birmingham?

Like other mortgages, your options are limited when it comes to what type of property you can take your student mortgage out on. Your property will have to match these terms and conditions:

  • The property has to be located within a 10-mile radius of your university.
  • You have to take the student mortgage out on a 3-or-4-bedroom house.

With these points in mind, you will have to find other tenants to move into the property with you. Once you have your tenants, you will move quickly through the mortgage process as your lender will know that you will have a regular source of income.

What happens if I can’t afford my payments?

Your lender will always look at the risks involved with lending to a student and that is why they need to be 100% sure that you can afford their payments. This is why they need a backup in case something goes wrong.

When taking out a student mortgage, they will ask for a guarantor. A guarantor is someone who will step in and be responsible for your mortgage payments if you cannot afford them. You will have to provide their details during your application. There are some rules when it comes to choosing your guarantor:

  • They cannot be 65+ at the point of application
  • The guarantor must own a property of their own within the United Kingdom
  • They must live in the UK

Think of it like the lender has to always view it from the worst possible scenario. It’s just a precaution in case things go wrong.

If you need a hand kickstarting your student mortgage application and want first time buyer mortgage advice in Birmingham, get in touch with a mortgage broker in Birmingham like us today. We will check whether you match the requirements or not.


Last edited 10/08/2022

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