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Saving For a Space Ship

How students can buy a £400,000 home with zero deposit

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How students can buy a £400,000 home with zero deposit

https://www.theguardian.com/money/2019/oct/26/how-students-can-buy-a-400000-home-with-zero-deposit-mortgage-university

Quote

...Does all this sound too good to be true? For most people it is, because there is a rather large catch: the loans will only be handed to students with relatively well-off parents.

In conventional buy-to-let deals, the borrower normally has to put down a 25% deposit. The “buy for uni” deals get around this by giving the student a 100% mortgage, but then putting a charge against the parental home to cover the risk.

Let’s say a student wants to buy a £120,000 three-bed in Manchester, and has parents who live in Brighton in a house valued at £600,000. Rather than demand a £30,000 deposit, the building society puts a charge of £30,000 against the property in Brighton, then lends the student the entire £120,000 for the home in Manchester. The parents don’t actually have to pay anything upfront but are liable for the entire loan if the regular monthly payments are not kept up.

A £120,000 mortgage on an interest-only basis will cost a student £500 a month – relatively easily covered by the rent from letting out a couple of rooms in the house, and allowing the young owner to live rent-free.

Steve Matthews of Bath building society, the first lender in the UK market, says it has lent £40m to student buyers since 2006, and arrears have been almost invisible. ...

 

Edited by Saving For a Space Ship

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1 hour ago, Saving For a Space Ship said:

Well .... despite the headline, they cant then.

A building society is offering 100% mortgages to 18-year-olds while at university. Spoiler: you’ll need wealthy parents

Its a desperate BS, slowly losing its reason for existing, speeding up its demise with specialist lending that it does not understand.

 

Bath building society says it knows of one student who used the scheme and walked off in her early 20s with a profit of about £120,000 four years later. She then bought an apartment in Manchester and lives entirely mortgage-free.

Of course they do.

Steve Matthews of Bath building society, the first lender in the UK market, says it has lent £40m to student buyers since 2006, and arrears have been almost invisible. “They are very good landlords. They may be very young but, because they own the property rather than renting it, they look after it well.

so, thats, 40m over 13 years. About 20 mortgages a year then. Arrears are 'invisible' as the parents have to pay it FFS.

 

 

 

 

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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