Students are often faced with heavy loans after three to four years of study. This results in a lengthy wait for student to even begin to consider becoming home-owners after university. However, The Guardian, has recently reported that lenders are now looking at students for early mortgages. The new ‘Buy for Uni’ mortgage from The Loughborough Building Society promises up to 100% financing for a property purchase as long as close relatives provide security.
Under the Buy for Uni deal students who are over 18 in higher education in England and Wales can get a loan for up to £300,000 as long as the property is within 10 miles of where they study. A member of their immediate family, parents, step-parents or grandparents can provide security in cash or equity in a property, if the loan is for more than 80% of the value of the property. Interest rates range between 4.54% and 4.74% depending on what security is provided and term of the mortgage. After three or five year term, when the student has graduated the mortgage becomes a more traditional loan. This way the student whilst in higher education becomes a landlord earning money from the spare rooms by renting them out.
With Cardiff being such a densely student populated city this model could provide an early pathway for our cities undergraduates to get on the property ladder. A success story of this model has been shown in Bath, the model has been going for nine years. Bath BS says the loans now account for about 10% of its mortgage business. Again, a guarantee is needed from parents to bring the loan-to-value ratio down to 75%.
Whilst the ‘Buy for Uni’ scheme appears beneficial for students giving them the opportunity to become landlords themselves this is still in the early stages. However, with great success in cities such as Bath, Cardiff is a city full of students dominating certain areas such as Cathays and Roath and there is a supply of properties to suit this need. Keylet Sales offer a wide range of student investment properties, contact us on 02920489000 and a member of our experienced team would be happy to help.