The process of securing a mortgage can be difficult at the best of times – but for students, it is even more challenging than for most people.
The typical student does not have loads of excess cash to spend, and it is therefore important that they understand all the options available to them, when trying to get a mortgage.
So, can a student get a mortgage? And, if so – what steps can students take to make this possible? Read our blog below for an answer to these important questions.
What is a student?
The definition of a student varies in the UK, depending on the scheme that you are applying for. For example, students are described differently when applying for benefits, compared with how some universities describe it.
As a general rule, you qualify as a student if you are in full-time or part-time education, at a university or college. This also applies to younger people who are at secondary school, although these people rarely apply for a mortgage.
Can a student get a mortgage?
Yes, it is completely possible for a student in the UK to get a mortgage. While it may be financially challenging, there are no rules preventing it.
To get a mortgage as a student, it is highly recommended that you speak with a mortgage adviser at the beginning of the process, so you understand all your options. Depending on your financial and educational circumstances (e.g. whether you are near the end of your course, where you live in the country, etc.) you may need support from a family member providing collateral.
You should also keep in mind that, for students, mortgage lenders want to be certain that you are a reliable recipient of their loan, and that you are going to pay it back. However, there are some factors which can influence how ‘reliable’ you are perceived to be – for example, whether you already have a job lined up once you finish a course.
Your mortgage advisor should be able to give you clear advice on how to improve your chances of getting a mortgage. It is highly recommended that you consult with them to clearly understand your situation.
Things to consider when getting a mortgage as a student
You are far more likely to secure a mortgage as a student if you have an income stream alongside your studying. For example, if you are studying nursing at a university, but also work part-time as a nurse, then a mortgage lender will look more favourably upon you, compared with a student who doesn’t have an income stream.
You are also more likely to be successful with a mortgage application if you are in the final year of education, rather than the first year. This is because final year students will be able to secure a full-time job in their chosen profession sooner, and therefore earn more money, which makes them a safer bet when paying back a mortgage. You may therefore opt to wait until your final year of education before applying for a mortgage.
Key steps in getting a mortgage as a student
If you are keen to make a mortgage application as a student, then the first thing you should do is gather all relevant information. This will include credit reports, amongst details about any additional income streams, as a mortgage lender will want to see all of this.
Secondly, you should speak to a mortgage adviser who can outline your options and explain what is/isn’t possible in your circumstances. For example, your adviser may recommend that a guarantor mortgage is the only way that you can financially achieve getting a mortgage – in which case, you will need to review whether this is appealing to you.
What is a Guarantor Mortgage?
A Guarantor Mortgage makes it possible for someone (e.g. a student) to secure a mortgage without a deposit or a good credit score. In this instance, a guarantor agrees to take responsibility for any repayments which you cannot pay. A guarantor is not just morally responsible for repayments if something goes wrong – they are legally responsible.
In a Guarantor Mortgage, the loan will be secured against something which belongs to the guarantor. In most cases, this is either some of their savings, or a property which they own themselves. This gives protection to the lender that they will get their money back if the borrower defaults.
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