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Can Students Get a Mortgage?

Written by, Marija Petkova

Updated September, 19, 2022

Being a student is one of the most exciting and expensive chapters in a person’s life.

Between rent, student loans, and other university-related costs, it can be tough to find a financial balance.

But, can students get a mortgage despite the lack of steady income?

Let’s find out.

What Is a Student Mortgage and Can I Get a Mortgage as a Student?

A student mortgage in the UK is a loan that students can use to purchase a property while completing their studies.

Student mortgage rates are often interest-only, and once the student graduates, the property can either be sold or remortgaged; although, they can opt for a repayment mortgage as well.

Many lenders in the UK offer mortgage loans for students, but they must be over 18 and have a source of income. Those that don’t will likely need to get a loan with a guarantor. 

The same applies to those trying to get a student mortgage in Scotland.

You may be interested in: How to get a mortgage on a low income?

What Is a Student Mortgage Guarantor?

A guarantor is usually a parent, a legal guardian, or a family member that agrees to take the responsibility for the loan should the borrower (in this case, the student) fails to keep up with the repayment plan. 

That said, not everyone can become a guarantor on a student mortgage loan. For students’ mortgage loans, guarantors need to:

  • Be in a direct family relation or a legal guardian of the student.
  • Be a property owner.
  • Have a stable income.
  • A clean credit history.
  • Have a permanent right to residency in the UK.
  • Mustn’t be in the maximum age bracket (75-80).

How Can a Student Get a Mortgage in The UK?

The best way to improve your chances of getting a loan is to show the lender that you can pay it back. 

When considering applicants for a student mortgage, lenders mainly look at two things: the student’s credit score– which tells the lender whether they are a responsible borrower— and their deposit– which means they’ll pay off more of the mortgage at the start. 

If the applicant has a good credit score, can put down a large deposit, and has an eligible guarantor to back up the loan, the lender is unlikely to reject the application. 

Although most first-time borrowers can get away with a 5-10% deposit, student borrowers are often required to put down more– at least 15%. 

However, there are cases where students can secure a university mortgage with a 0% deposit– also known as buy-for-uni mortgages.

A buy-for-uni mortgage, as the name suggests, is a mortgage for university students in the UK that provides them with the funds to purchase the property but also allows them to rent out rooms to other students and use the rent money to cover their mortgage payments.

These 0% deposit buy-for-uni mortgages are risky for the lender, which is why they always require a guarantor and come with a high-interest rate. 

If the student has a deposit that’s less than 20% of the property’s value, the guarantor will need to either put money on account with the lender or use their own home as collateral for the loan.

Mortgage and Student Loans: How To Get a Mortgage With Student Debt?

A student loan won’t necessarily disqualify you from getting a mortgage, but the lender will consider this debt during the affordability check. 

The good news is lenders will also look at your credit history, current earnings, and the size of your deposit to determine whether you’re a good applicant when getting a mortgage as a student. What’s more, this type of debt does not show up on your credit report and won’t affect your credit score.

This means that as long as you have a good credit score and can prove to the lender that you can pay back the mortgage, they have very little reason to reject your application.

Mortgages For International Students In The UK

It is possible to get a mortgage as an international student in the UK as long as you meet the lender’s requirements. 

The main issue for international students is the stringent guarantor requirements– eligible guarantors for student mortgages in the UK must reside in the country and have a permanent right to residency.

Comparing Student Mortgages

Comparing different offers from a variety of lenders is the best way to find a good deal.

Here are some of the best mortgage providers in the UK that offer university mortgages for students:

Mortgage providerWhat they offer
HalifaxYou can borrow 95% – 100% of the purchase price.
Nationwide Building SocietyYou can get a £500 cashback for first-time buyers that have completed a mortgage term.
BarclaysYou can apply with a minimum deposit of 5% of the property purchase price.
Virgin MoneyYou can make overpayments of up to 10% per year without an early repayment charge.
SantanderYou can choose to make mortgage repayments of up to 40 years.
TSBYou can get a 5-year fixed interest rate as a first-time buyer.

If you’re not sure whether you’re a good candidate for a mortgage or don’t know what lender to pick, you should consider reaching out to a mortgage broker who can find you the best deal on the market.

Bottom Line

If you’re a student in the UK but are also looking to become a landlord, you can take out a mortgage from any lender that offers mortgages to students, but you’ll have to meet the lender’s eligibility criteria. In addition to having a good credit score, you’ll also need a guarantor (considering you don’t have a large enough income to pay back what you’ll owe). 

Keep in mind that guarantors for students’ mortgages have to meet certain requirements as well.

                           

Frequently Asked Questions And Their Answers

Can you get a mortgage with a student loan?

Although student loans don’t end up on your credit report and won’t affect your credit score, lenders will take into consideration what you owe when determining whether you can afford to take out a mortgage. 

Can Ph.D. students get a mortgage?

Like any other student, Ph.D. students are eligible for getting a mortgage as a graduate student and some lenders will even consider their stipend as a form of income.

Can mature students get a mortgage?

Mature students can qualify for university mortgage loans. Some lenders will only offer them a mortgage with a guarantor but they may find providers that can grant them the ability to be sole applicants, especially if they have a stable income and put down a bigger deposit.

Is a guarantor needed for the whole student mortgage term?

Once students prove that they have the financial stability to make the repayments, only then can students get a mortgage transferred from the guarantor and under their name.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.