Using student loan for mortgage

[TheDefiant]

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?

I wouldn’t assume it’s easy to fill rooms mid year. People sign up to houses almost a year in advance

The real plan is that the rent from his flatmates negates the need for any further loan. The student loan is backup.

We hope to assuage any parental concerns by asking rent at a huge discount to the going rate in the area (£800-£1,200 pcm for students). Around half (£400) if possible.

We realise timings will be difficult but will roll with that.

Will £800 pay the mortgage and bills then?

@user989 we are sorting it now for September. Conveyancing could take months! If it's quick we'll cover the mortgage until September.

We have the deposit and an offer in principle.

Remember that student tenancies are generally about 40 weeks so he’ll need to fund the mortgage and bills for the rest of the time.

@user989 depends on the final price! We have found somewhere that could fit with that.

We'd share bills amongst 3 though. It won't be rent including bills. Will still be cheaper.

Will insist on all students so no council tax.

DS will have earnings from his job* and his allowance from us.

*once he gets one!!!

@user989 not after first year!

All the DC of my friends have had to take on 12 month tenancies in the area.

But in any event we are planning on him only asking his friends for 10 months out of the 12.

It’s obviously a costly area where student property is in demand. Mine are paying about £150 a week which includes a bill allowance snd 42 weeks is the norm for student house tenancies. Sounds like you’ve got it sorted

OP this has disaster written all over it !

Unless you are in a position to buy him the house outright then this is going to cause a lot of stress and unnecessary drama for very little financial return.

Not to mention that being landlord is hard work, and being a live in landlord with friends at 18/19/20/21 is a TERRIBLE idea !

Your son is doing a degree with fantastic future earning potential- now isn’t the time for financial commitments , he needs to spend the next few years concentrating on his degree, earning should be the pt job round his studies at the moment.

I just don’t see how the maths works unless property is incredibly cheap in the area.

£400 a month for ten months x 2 is £8000 a year or £666 a month. That’s a very low mortgage for a three bed house.

Sounds like you’ll be very involved in the tenancies and so on. Makes sense, given you’ll be on the mortgage even if he is sole owner.

Will that extend to sorting out arguments, chasing unpaid rent and so on? And is your son mature enough for the responsibility? Can you trust him to pay the bills and look after the place properly?

Is it Edinburgh? Would surely have to be a cheap flat in an undesirable area if £800/month would cover mortgage. Do you know the area yourself? Know what the neighbours are like?

Most student flats don't have a sitting room. The sitting room becomes an additional bedroom. We're only looking at 2 bedroom places. DS will take the "worst" room.

That isn’t my experience. They need and want a communal space

Son is very mature. Most people mistake him (by actions as well as looks) for a 25 year old.

He has a love/hate relationship with being thought to be older than he is.

We've spent months going over all the bad sides. As I've said I'm a planner.

The sitting room as bedroom is my experience and that of my friends DC who are renting student flats in the area 🤷🏼‍♀️

The kitchen will be the communal space. We're looking for places with a big enough kitchen.

@DownThePubWithStevieNicks he will look after the place properly.

This is the boy that set up a H&S club to make sure they were climbing trees safely. Who goes clubbing with a first aid kit. Who is first aid trained. Who has always walked female friends home and who gets called at 3am to rescue friends stuck in the middle of nowhere!

He already does all sorts of sorting and fixing at his student halls. He sorted the automatic door closer on several doors in several flats. He fixed the fridge. He reports things to the maintenance team.

He's the flat Dad for sure, even though he's the youngest. He does all the recycling, cleans every Saturday morning and cooks (he's a foodie).

He's a good egg. The only thing he moans about is how quickly his laundry basket fills up!

Can you afford the mortgage payments if he defaults for whatever reason. That's the bottom line really.

As I said upthread it sounds like you’ve found the holy grail, location where property is very cheap to buy but big enough to have a large separate kitchen and living room with a hallway separating all rooms so the living room can be converted to another bedroom plus no expectation of a communal space but still charging very high student rents with bills on top and twelve month tenancies. It’s the landlords dream

No, you’ll need a living room, if you try and do this you’ll likely struggle to get students to pay the going rate, they’ll expect a living room.

My parents did similar to this when my sister was at uni, they were going to be supporting her anyway and it made more sense than paying rent. They never had any major issues, she stayed on and got a job and kept on renting to house mates for a couple of years after she graduated, and eventually sold when she wanted to move elsewhere.

Yes. But not for 4 more years! That's why he'd have to get the loan if something went wrong.

@Changingplace we're not going to charge the going rate. We're going to ask for half the going rate.

He's already got 2 friends asking to live with him.

It’d be no different to them being guarantor for his rent, most parents do that for students.

I think you’d be better just charging the going rate or slightly under to keep it competitive, why charge less?

Also @Changingplace we know a few students in the area. None of them have sitting rooms. All the rooms are bedrooms.

This was the case when I was a student many years ago. I stayed at home though but I visited friends. The only friends who had sitting rooms were those doing post graduate qualifications.

Even my friend (whose family were on the rich list at the time) had a flat with no sitting room!! She got bought a brand new jeep to go to Uni...

How is he going to qualify for a mortgage with no income?