Mortgages for Students
Are you a student looking to buy a property? The experts we work with specialise in securing mortgages for people who are still in education.
Firstly, are you currently a student in the UK?
No impact on your credit score
Author: Pete Mugleston - Mortgage Expert, MD
Updated: December 10, 2021
As a student without an employment history, it may not always be easy to find the right mortgage provider.
But from using a guarantor to improving your credit score or accessing niche deals, there are many ways to open doors and take that first step on the property ladder.
In this guide, we’ll explore these options so you have a clear idea of the next steps to take to make your dream of homeownership a reality.
The following topics are covered below...
Can a student get a mortgage?
Yes. Mortgages are available to students looking to buy their first house, but they must prove that they have enough income and a credit history that makes them eligible to qualify for a loan.
The process of securing a mortgage will differ depending on what type of student you are (e.g., undergraduate or graduate), how much experience you have with loans and whether or not you’re married – but there are some general guidelines that apply across the board when it comes to qualifying for a mortgage.
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Will a student loan impact your application?
The good news is that having a student loan won’t impact your credit score or prevent you from getting a mortgage.
Higher education related loans are seen as less risky because repayment isn’t expected right away – at least not until after graduation.
However, lenders will still take your student loan into consideration when examining the bigger picture of your finances, taking into account how much you will have to repay each month and whether that will impact your ability to meet monthly mortgage repayments.
How debt impacts your eligibility
If you have any outstanding debts, like credit card payments or car loans from before your mortgage application was approved – this could impact lenders’ decision on whether or not to approve an application.
Mortgage providers will factor these financial obligations into your ability to repay your loan, and existing debt may also lower your credit score.
Even if your income can cover any mortgage repayments, if your credit isn’t up-to-par, lenders may refuse the loan.
Clearing any existing debt before applying for a mortgage will boost your credit and mortgage loan options.
If you have any concerns about existing debt, a mortgage broker can help to guide you through best options for accessing a loan.
Credit history requirements
Every lender will score you differently and have their own credit requirements, but even if you don’t have a stellar credit history, there are many ways to improve your score and get approved for a mortgage.
Just because one lender may have rejected you, it doesn’t automatically mean others will too.
Check your credit file for errors and ensure linked names, addresses and your payment history are up to date before reapplying.
If you have bad credit, keep in mind that there are lenders and brokers who specialise in bad credit mortgages, and they could help you get approved despite whatever issues are listed on your file.
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Does a student bursary count as income for a mortgage?
If you are a PhD student, Trainee Teacher, or NHS Student with a bursary you may wonder whether it can count as income for a mortgage.
The good news is that while many banks may not accept bursaries and stipends as income, there are some mortgage providers who do assess all cases individually and include certain types of bursaries as income.
Guarantor mortgages for students
Most lenders require borrowers to have at least two years’ worth of consecutive employment.
However, even if you don’t have a regular income of your own, or sufficient credit history, you can still apply for a mortgage with the help of a guarantor.
However, there are strict eligibility requirements for a student guarantor – they must:
In addition to these requirements for guarantors, you will likely need a minimum deposit of about 15% of the property value.
However, with the help from a broker who specialises in student mortgage it may be possible to secure loans at a 90%-100% loan-to-value ratio.
In some cases, the brokers we work with have found 100% loan-to-value ratios – this is a deposit free mortgage.
However, your mortgage repayments are likely to be much higher compared to when using a standard deposit-based mortgage.
Guarantor mortgage types and lenders
In today’s competitive market, guarantor mortgages could make the difference between getting that much-anticipated loan or having your application denied.
Students should be aware of the two main types of guarantor mortgages available.
Savings as Security
Over the past few years, the mortgage industry has been changing to enable more options for accessing a mortgage loan.
Barclays, Family Building Society, Tipton and Mansfield all offer guarantor mortgages in which 5-20% of the property value is typically deposited into a savings account and held as security for the mortgage for a number of years or until the majority of the loan is paid off.
Property as Security
Buckinghamshire, Family Building Society, Mansfield, Nationwide and Tipton are some examples of providers that offer guarantor mortgages where the guarantor’s property is used as security.
However, going directly to a mortgage provider isn’t recommended. Countless homeowners have gotten better rates and saved time and money by eliciting help from an expert broker.
A huge benefit of getting a mortgage through a broker is that they often have access to exclusive deals that may not otherwise be advertised or available.
An expert broker also understands that the right mortgage must be suited to your individual situation and can help you circumvent red tape to get there.
The amount of deposit you need for your mortgage is worked out as a percentage of the value of the house that’s being purchased.
Most mortgage providers offer 95% mortgages – requiring a deposit of just 5% for students, but you can potentially get a mortgage with no deposit at all if you’re using a guarantor who can evidence enough security to the lender.
At the time of writing (October 2021) the average UK house price currently sits at around £250,000, so you’d need a minimum 5% deposit of £12,500.
Every 5% deposit increase – 10%, 15% – will help you secure a better interest rate with very attractive deals becoming available at around 20% deposit.
Mortgages for international students
For international students, getting a mortgage in the UK is straightforward. Your credit history and financial standing are taken into account – not your place of birth or nationality.
However, if you don’t have an employment income history, finding a UK-based guarantor who owns property and is your legal guardian could pose a challenge.
But even if you fall into this category, don’t lose hope.
Seek professional advice and ask your mortgage broker whether there are ways that you could qualify for a 100% student mortgage, or understand the best steps to take for your situation.
Get matched with a broker who specialises in student mortgages today
If you’re a student looking for the best mortgage deals, the expert mortgage advisors we work with can help you find the right deal and get started with buying your new home.
And don’t worry if you are still unsure about whether or not you qualify for a mortgage – your broker will be happy to answer any questions about mortgages that might arise and will advise you every step of the way.
Our free service can match you with a professional who has contacts and expertise for securing exactly the type of mortgage you need.
The experts we work with will first help you assess your needs and then put you in touch with the right lender.
Contact us at 0808 189 0463 or make an enquiry today to get started.
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Mortgage Expert, MD
About the author
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!