A new mortgage product, the Buy for Uni mortgage, has been released by Loughborough Building Society, giving up to 100% of the property value, as long as the students have financial backing from close relatives.
Bath Building Society has been offering a similar mortgage product for a few years, although student representatives are calling for caution. The new product offers up to £300,000 for students who are over 18 years old and are buying a property within 10 miles of their study location. If the loan is for more than 80%, family members must be able to provide security, either as equity in their home or as cash. Dependent on the mortgage term and the security, the interest rates will be between 4.54% and 4.74%.
Once the student has graduated from University, the mortgage will generally revert to a traditional mortgage. The mortgage payments are covered by the student renting out spare rooms in the property, aiming to cover more than the commitment in case interest rates rise.
According to Bath Building Society, around 10% of its mortgage custom is for the student mortgages, which have been available for around nine years. Dick Jenkins, the Chief Executive, states that the product isn’t suitable for all students, especially as parents will have to have equity or cash to offer as security.
Mortgage advisers spend time studying on a CeMAP course, so that they learn about all types of mortgage and can offer advice to individuals considering applying for a mortgage.