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Buy-to-let mortgages for the student market



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Sponsored feature | Rachel Zschieschang, Mortgage Advice Bureau

Rachel Zschieschang, Mortgage Advice Bureau (53755485)
Rachel Zschieschang, Mortgage Advice Bureau (53755485)

Can I get a buy-to-let mortgage for a student property? In short, the answer is yes - if you have a property you want to rent out, letting it to students may seem like a great opportunity since student rental yields are higher than any other rental sector.

While there are no differences between a student buy-to-let mortgage and a standard buy-to-let, other than the type of property you rent and who you rent to, renting of this variety can sometimes be considered more high risk by lenders, so you may have to find a specialist lender when applying for a mortgage.

We will go through exactly what a student buy-to-let is, the pros and cons of this type of letting, and things to consider before making a final decision.

What is a student buy-to-let mortgage?

A student buy-to-let mortgage is the same as a standard rental mortgage - the difference being that it’s a mortgage taken out on a property you plan on letting to students.

Student buy-to-let mortgages are usually taken out on large houses you can redevelop to maximise the use of space, or purpose-built student flats. There isn’t necessarily a right type of property you should buy, it’s about making the right decision based on your financial situation and the renting opportunities in the local area.

What is the mortgage process for a buy-to-let?

Much in the same fashion as a standard residential mortgage application, when applying for a buy-to-let lenders will need proof of income, bank statements, and may perform a credit check. This is a good time to clear up any debt or bad credit that could negatively impact your application.

However, where a mortgage application for a residential property would take your salary into account as the main form of monthly repayments, for a buy-to-let lenders will look at rental income to assess whether or not what you charge your tenants will be enough to cover repayments and any additional expenses. So make sure to have a good think about the prices you’re thinking of charging.

Now we’ve cleared up the formalities of getting a mortgage for a student property, let’s get into the nitty gritty of whether it’s actually a worthwhile investment.

Advantages and disadvantages of becoming a student landlord

As with any investment, it’s always important to weigh up the pros and cons to help make sure that you’re making a decision that is right for you.

We’ve put together some pros and cons of owning a student buy-to-let, to help you make an informed decision about whether or not this avenue is something you’d like to pursue.

Some advantages of becoming a student landlord are:

  • Students are always looking for accommodation - as a long-term investment, a student buy-to-let is almost guaranteed to bring in a constant source of money because students will always be looking for a place to live while studying.
  • Students are generally less fussy - more often than not, students will be less picky about how expensive the furniture is, or how much wear and tear it’s had. Investing in sturdy, low-priced furniture from somewhere like Ikea is sure to be a hit with most potential tenants.
  • Renting to multiple students - renting out your property to multiple students is a sure way of getting regular income, as you have more than one source of rental income. Not only this, but if each student has their own guarantor, you’ll be secured from all angles should some students fall through on their rent. However, if you are renting to multiple students in one property, your property could be classed as an HMO (houses in multiple occupation), so you’ll need to get a permit for this.

Now we’ve gone over the pros, it’s time to consider any potential negatives. Some disadvantages to letting out to students could be:

  • Complaints- given the nature of the student nightlife and general liveliness, you may get complaints from neighbours about noise levels or even have to deal with potential property damage, so be sure to take this into account when deciding on a deposit price too.
  • You will be responsible for maintenance and checks - being the owner of the property, any maintenance checks like gas, fire, or electrics are your responsibility to keep on top of. Sometimes these things can be costly if they need repairing, so factor this into your total cost before making any final decisions.
  • Holiday periods - during holidays, when students flock abroad or go back home, there can be a bit of a lull in terms of rental income. However, most landlords tend to get around this by having a 12-month contract, so that rent is covered all year round.

As you can see, letting a property to students is full of advantages but also has its own shortcomings. Ultimately, only you can decide if it’s something you feel comfortable doing, but if you have any questions or if you would like to discuss buy-to-lets in more detail, our team are on hand to guide you through the process. Call us on 07375 886347 or you can visit our website at mortgageadvicebureau.com/cambridge.

Because we play by the book we want to tell you that your home may be repossessed if you do not keep up with repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances, but a typical fee is up to 1 per cent of the amount borrowed.

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