Students now have the chance to become landlords, thanks to a new ‘Buy for Uni’ mortgage offered by the Loughborough Building Society.
As long as they have the financial backing of family, the Loughborough Building Society are offering mortgages to students under their ‘Buy for Uni’ scheme; enabling students to rent the spare rooms to their friends and essentially making them their own landlords.
The building society’s website describes the unusual offering:
“The principle behind the Buy for Uni mortgage is simple. With the help of parents, a step-parent or grandparents a student can buy a house rather than pay a great deal of rent for less than great accommodation. They rent spare rooms in the house to friends or fellow students and the rental income covers the mortgage payments.”
All students in England and Wales who are over 18 can use the mortgage to buy a house as long as it is within ten miles of their university. The loan can be for up to £300,000, as long as family members can provide security in the form of cash or equity in a property, such as the family home.
The chief executive of the building society, Gary Brebner, has called the mortgage a ‘gateway product’ to get on the property ladder. A similar scheme has been offered by Bath Building Society for nearly ten years, offering products ranging from a two year to a five year mortgage with 0.25 percent discount.
For many students, who leave uni with a pile student debt and enter an adult world in which it is increasingly difficult to get a mortgage, buying their own home seems an impossible task. Schemes such as this may well make getting on the property ladder more attainable.
However, the products have been criticised for their high interest rates – between 4.54 percent and 4.74 percent for the Loughborough Building Society loan – and for offering students an opportunity that could turn into heavy debt.