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Original poster

Using student loan for mortgage

116 replies

TheDefiant · 27/01/2025 21:03

My DH and I are trying to set our DC up in a way we never were.

We're trying to arrange a joint borrower, sole proprietor mortgage for our DS at Uni.

Part of this aim is to get him on the ladder as soon as possible and avoid taking out a student loan. He'd have mates in whose rent would cover the mortgage and just so you know, we'd charge half the going rate in the area to pass on the benefit to his mates.

I'm a planner and like to have a back up plan. Do you think, if it came to it, that taking out a student loan after all isn't such a bad thing?

OP posts:
KnickerlessParsons · 27/01/2025 21:28

How will he cover the mortgage after uni, after his friends stop paying him?

PrincessofWells · 27/01/2025 21:30

KnickerlessParsons · 27/01/2025 21:28

How will he cover the mortgage after uni, after his friends stop paying him?

Lodgers . . .

Original poster
TheDefiant · 27/01/2025 21:30

He'll get a job and/or sell and move.

He's in a degree that leads to high rates of employment and good salaries (engineering)

OP posts:
user989 · 27/01/2025 21:30

Presumably he’s already 18 since until he is he can’t own property. How will you cover the rent for his first year when he’s in halls?

Coconutrice · 27/01/2025 21:31

does he definitely want to stay in the same city beyond uni or is he fairly relaxed about the idea of renting out the house while he potentially moves away for travel / work? Maybe bear in mind the cost of switching to a buy to let mortgage (though a lot
of people don’t bother I guess)

Original poster
TheDefiant · 27/01/2025 21:32

He's 18 and in halls right now. Covered by a combination of student loan, his (earned) savings and an allowance from us.

We have separate savings for his deposit and he plans to use his child trust fund too.

OP posts:
user989 · 27/01/2025 21:32

It would need to be a registered HMO if you have more than two unrelated students in it

user989 · 27/01/2025 21:33

And remember he will be taxed on the income

Original poster
TheDefiant · 27/01/2025 21:33

It shouldn't need to be registered as an HMO as he'll be living in it.

There won't be that many bedrooms though anyway!

OP posts:
user989 · 27/01/2025 21:34

TheDefiant · 27/01/2025 21:33

It shouldn't need to be registered as an HMO as he'll be living in it.

There won't be that many bedrooms though anyway!

I believe that is incorrect. If a house has more than two unrelated students its an hmo

Precipice · 27/01/2025 21:34

user989 · 27/01/2025 21:30

Presumably he’s already 18 since until he is he can’t own property. How will you cover the rent for his first year when he’s in halls?

That's not true. Even an infant can own property.

Original poster
TheDefiant · 27/01/2025 21:34

He can earn somewhere in the region of £7,000 from lodgers tax free and will have his own tax free allowance (the same one every person has). There's no way he'll earn and receive in rent anything over that!

OP posts:
user989 · 27/01/2025 21:36

Precipice · 27/01/2025 21:34

That's not true. Even an infant can own property.

Show quote history

Only via a trust

Original poster
TheDefiant · 27/01/2025 21:37

I've just checked. Home owner plus 2 lodgers will not need an HMO. Anything over 2 lodgers and he'd need an HMO.

We're not looking at places that big. It'll be him and 1 other, 2 at the absolute max.

OP posts:
Coconutrice · 27/01/2025 21:38

I had a mortgage on a flat with parents as guarantors while at uni. There were huge positives in having an investment and getting on the ladder. But I think it did mean I was reluctant to move away after graduating as I was nervous about renting it out etc and that’s hindered me career wise. This wasn’t helped by my parents not really considering that I might want to move or go in exchange etc and me being quite an anxious person. I know other people who bought houses in university towns, moved away and had nightmares renting out to students who treated the houses badly. Obviously not all students are like that but I’d map out all the scenarios before going ahead.

user989 · 27/01/2025 21:38

TheDefiant · 27/01/2025 21:34

He can earn somewhere in the region of £7,000 from lodgers tax free and will have his own tax free allowance (the same one every person has). There's no way he'll earn and receive in rent anything over that!

We looked at it since ds1 and ds2 are at the same university. We couldn’t make the numbers work since we needed a house for 3/4 to make it financially viable and the hmo rules made it difficult. You might be ok if it’s just your son and one lodger

titchy · 27/01/2025 21:40

If part of the aim is to avoid him taking out a loan, why is he currently living off.... a loan? Presumably his fees have also been paid.... by loan? So forget that aspect, he's going to be paying back a loan for many years - isn't engineering a 4 yr degree?

Investing in a property then is the financial reason for this. So, is this an area where properties are likely to rise in value? What if the market goes down when he's finished? Will he feel like he has to stay in order to try and reduce the loss - maybe sacrificing a few years of career if there are better jobs elsewhere?

LIZS · 27/01/2025 21:41

Where does student loan fit in?

Original poster
TheDefiant · 27/01/2025 21:42

Our son is doing a 5 year degree (Masters) so will have 4 years there.

He will likely move.

We'll be happy to sell.

We wouldn't even worry about making a profit. Just cover our costs. If he can live effectively rent free for 4 years we'll be happy and so will he. He lives somewhere where demand for student accommodation is high and sometimes outstrips supply.

He's excited about it and looking forward to the DIY element of home ownership! 😆

OP posts:
Original poster
TheDefiant · 27/01/2025 21:44

No fees in Scotland.

He's moved away. Needed loan to cover housing/living costs.

OP posts:
Original poster
TheDefiant · 27/01/2025 21:46

I was asking about having the loan in case he needs it to cover the mortgage (ie his flatmates don't pay or drop out or something)

Though as I said he'd find new flatmates quite easily due to supply and demand.

OP posts:
titchy · 27/01/2025 21:46

Ah Scotland! My bad assuming rUK.

user989 · 27/01/2025 21:49

So you’d be taking the loan to make the mortgage payments? Have you factored in the interest on the loan? It accrues from day one.

the other factor is that the parents of the friends might not be happy with them just being lodgers who have limited rights.

as I say we have had the same thoughts (but could buy outright so no mortgage involved). It was too complicated though in the end particularly when you factor in timing the purchase right to avoid down time, stamp duty and legal fees, various compliance stuff like gas safety etc. we were looking at more than 2 tenants though

Original poster
TheDefiant · 27/01/2025 21:49

I'm thinking if everything goes according to the dream he'll leave Uni and only have taken out the student loan in first year.

He'll have an asset to sell

His degree will be in demand

OP posts:
user989 · 27/01/2025 21:51

If he has the deposit and fees etc and someone will give him a mortgage then it might be ok.

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