Shelter’s Income and expenditure figures highlighted13:57 PM, 4th February 2019
About 2 weeks ago 35
Seriously, this is NOT a wind up! Our regulated mortgage broker of choice has informed us of a deal that he’s done with a lender which allows students to invest into a buy to let property worth up to £250,000 with NO DEPOSIT. What’s more, the lender is offering a 0.25% discount off their standard variable rate for the first two years.
I can assure you this is absolutely genuine, both myself and my business Partner Neil Patterson have double checked this with the mortgage lender directly. They are a very credible and established mortgage lender too.
Obviously there is criteria involved, the key principles of which I have outlined below.
Who can apply for this mortgage?
The mortgage is available to students in Higher Education throughout England and Wales. An application can be made in the sole name of the student, or jointly between the student and their parents. In the case of a sole application, the lender will require a parental guarantee.
Up to 100% of the value of the property, subject to a maximum £250,000. The actual amount you can borrow will depend on the income that will be received from letting rooms within the property. Where this is insufficient rental to support the mortgage, the lender will consider parental income after deductions for financial commitments.
What Security is required?
The lender will require a first charge over the property to be purchased. Additionally, on loans greater than 80% of the value of the property, the lender will also require a collateral charge over the residential property of the parents.
We expect these mortgages to be very popular with students who want to buy a two or three bed flat or house to live in and rent out the spare room to their friends. There are massive tax breaks involved in this too as rent collected for renting out rooms in your own home is tax free for the first £4,250 a year regardless of any other income or tax allowances.
What sort of property is acceptable?
The property must be in England or Wales and must be located within a 10 mile radius of the university attended. The property must have no more than four bedrooms. There are specific properties the lender will not consider, such as ex local authority flats, or flats in blocks of more than 6 storeys.
The lender will allow no more than 4 occupiers, to include the mortgage holder. Tenancies must be granted under a Licence Agreement. The other tenants do not have to be students.
The lender recognises that the student letting market operates within specific time frames; students are often looking to secure accommodation in January or February for occupation at the start of the academic year in October. This may require a property to be bought in January or February in order to market it to sharers for the following academic year. With this in mind the lender will allow the property to be let under an Assured Shorthold Tenancy for a minimum period of 6 months provided it is then occupied by the student as their main residence by 1st October at the start of the next academic year.
For obvious reasons, our recommended mortgage broker does not want us to disclose the details of this lender. He expects to be flooded with applications but also doesn’t want other brokers to get in on this as the lender may withdraw from the market once they have hit their targets.
Therefore, if you are seriously interested in finding out more, please complete the form below and we will pass on your details to our recommended broker so that he can make contact with you. When you submit the form we will link you through to our recommended mortgage brokers profile page on his website.
Also see our article on on how to find good lodgers.
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