BTL Mortgage for a student
Discussion
As title, a good friend that passed away just over 4 years ago and his youngest has just turned 18 meaning she can now have unlimited access to her inheritance. She will be going away to uni and due to the sums involved (approx £70k) she will I believe have to fund most if not all herself, I suggested it might be an idea to purchase a BTL to get a steady income as around the area we live she would be able to buy a 2 bed with a 50ish % mortgage and receive a monthly gross rent of approx £600-700pcm
Is there any chance of her obtaining a BTL mortgage?
Is there any chance of her obtaining a BTL mortgage?
Saleen836 said:
I suggested it might be an idea to purchase a BTL to get a steady income....
Seriously, my suggestion is that she avoids your suggestion like the plague.Something involving the letters I, S and A would seem an alternative place to start. Possibly involving an L as well.
Orchid1 said:
I could be wrong but a lot of lenders need the person to be above a certain age and earning more than £25k in full time employment I think?
Some lenders don't have a minimum income (doesn't need to be full time) but in those situations you would usually need an income of sorts. Still could be do able to do it however would need a very good reason to do so.Could also fall down on the non owner occupier part. Again some lenders can do it, but would again need to be a good case to go outside of that. Being a student wouldn't help that unless buying in a different area.
Sarnie said:
Too young.
No income.
Not a residential property owner.
Not a BTL owner already.
Not possible.
I forgot to add she does have a part time job but did think her age would go against her, just looking for ideas to garnish a small income from the money instead of her keep dipping into it then suddenly realising it's almost all gone!No income.
Not a residential property owner.
Not a BTL owner already.
Not possible.
Saleen836 said:
I forgot to add she does have a part time job but did think her age would go against her, just looking for ideas to garnish a small income from the money instead of her keep dipping into it then suddenly realising it's almost all gone!
Too young.Insufficient income.
Not a residential property owner.
Not a BTL owner already.
Not possible.
Maybe a better plan to buy where she's going to uni and live in it, then rent out the spare rooms to other students as lodgers? Much friendlier from mortgage and tax points of view. Lodger income might not count for mortgage purposes (and they may prefer not to know about the lodgers at all!), so she might need a guarantor to get the mortgage, but as residential rather than BTL it should be feasible.
Jamp said:
Maybe a better plan to buy where she's going to uni and live in it, then rent out the spare rooms to other students as lodgers? Much friendlier from mortgage and tax points of view. Lodger income might not count for mortgage purposes (and they may prefer not to know about the lodgers at all!), so she might need a guarantor to get the mortgage, but as residential rather than BTL it should be feasible.
Nope.Won't work that way either.
Even if it were possible an 18 year old me would not have wanted the hassle. I'd say keep it simple.
Pay for the course, stick rest in ISA, be debt free, and she has enough left for a house deposit after uni. A great financial position for someone of her age.
I would also encourage her to make a plan she has lots of money and a lifetime ahead. It may be worth paying for some advice? For example, if she invested it all and got 6% returns she would have over 700k at age 60.
Put 20k toward uni and invest rest it would be £500k at age 60.
Personally, I think I would go 20k uni, 30k house deposit, invest 15k in pension/isa for long term and 5k to spend on holidays and experiences to enjoy after losing a parent so young.
Pay for the course, stick rest in ISA, be debt free, and she has enough left for a house deposit after uni. A great financial position for someone of her age.
I would also encourage her to make a plan she has lots of money and a lifetime ahead. It may be worth paying for some advice? For example, if she invested it all and got 6% returns she would have over 700k at age 60.
Put 20k toward uni and invest rest it would be £500k at age 60.
Personally, I think I would go 20k uni, 30k house deposit, invest 15k in pension/isa for long term and 5k to spend on holidays and experiences to enjoy after losing a parent so young.
Edited by covmutley on Monday 3rd December 07:33
I don’t think the property idea is all that logical. I guess it is a thought as it ties the inheritance up, which is a good thing but it’s a mill stone for someone just going to Uni. There is also the risk of zero income or negative income.
The point of going to uni is to expand the mind and prospects of a young person and property ownership can end up being a negative impact in many ways.
As a young woman who intends to obtain a qualification and have a professional career then despite all the equality laws on the planet she will still have a financial disadvantage over a man due to her statistical likelihood of having a child at a later date. An inheritance at a young age has the ability to combat that.
Ultimately, as you intimate, the single biggest risk is that the individual will start ‘dipping’ and once someone does start that process it usually only stops when the bank stops facilitating. To be honest, there just isn’t much you can do if someone is a spender or if they have not been educated as to what that money is for prior to receiving it.
While buying a btl is technically a bad idea only you know this person. Only you know who they are, their attitude to money, how well they have been educated over the years as to what it is meant for, how easily swayed they are by others, how much they like shopping etc. And if you genuinely believe that there is a strong likelihood that they will do what a very large number of people will do then sticking it into a s
tty, unleveraged BTL might not be the worst plan in the world just for the benefit of utilising it’s illiquidity etc?
The point of going to uni is to expand the mind and prospects of a young person and property ownership can end up being a negative impact in many ways.
As a young woman who intends to obtain a qualification and have a professional career then despite all the equality laws on the planet she will still have a financial disadvantage over a man due to her statistical likelihood of having a child at a later date. An inheritance at a young age has the ability to combat that.
Ultimately, as you intimate, the single biggest risk is that the individual will start ‘dipping’ and once someone does start that process it usually only stops when the bank stops facilitating. To be honest, there just isn’t much you can do if someone is a spender or if they have not been educated as to what that money is for prior to receiving it.
While buying a btl is technically a bad idea only you know this person. Only you know who they are, their attitude to money, how well they have been educated over the years as to what it is meant for, how easily swayed they are by others, how much they like shopping etc. And if you genuinely believe that there is a strong likelihood that they will do what a very large number of people will do then sticking it into a s
tty, unleveraged BTL might not be the worst plan in the world just for the benefit of utilising it’s illiquidity etc?covmutley said:
Even if it were possible an 18 year old me would not have wanted the hassle. I'd say keep it simple.
Pay for the course, stick rest in ISA, be debt free, and she has enough left for a house deposit after uni. A great financial position for someone of her age.
I would also encourage her to make a plan she has lots of money and a lifetime ahead. It may be worth paying for some advice? For example, if she invested it all and got 6% returns she would have over 700k at age 60.
Put 20k toward uni and invest rest it would be £500k at age 60.
Personally, I think I would go 20k uni, 30k house deposit, invest 15k in pension/isa for long term and 5k to spend on holidays and experiences to enjoy after losing a parent so young.
Unless she gets a really highly paid job when she graduates (e.g. in the City, a corporate lawyer etc), paying uni course fees upfront is a bad idea. Pay for the course, stick rest in ISA, be debt free, and she has enough left for a house deposit after uni. A great financial position for someone of her age.
I would also encourage her to make a plan she has lots of money and a lifetime ahead. It may be worth paying for some advice? For example, if she invested it all and got 6% returns she would have over 700k at age 60.
Put 20k toward uni and invest rest it would be £500k at age 60.
Personally, I think I would go 20k uni, 30k house deposit, invest 15k in pension/isa for long term and 5k to spend on holidays and experiences to enjoy after losing a parent so young.
Edited by covmutley on Monday 3rd December 07:33
Somebody said:
Unless she gets a really highly paid job when she graduates (e.g. in the City, a corporate lawyer etc), paying uni course fees upfront is a bad idea.
I completely understand why you are saying that. Although I would counter to say that unless going for a vocation like teaching, nursing etc, you may question whether it is worth going at all if your plan is to not earn enough to pay it back covmutley said:
Somebody said:
Unless she gets a really highly paid job when she graduates (e.g. in the City, a corporate lawyer etc), paying uni course fees upfront is a bad idea.
I completely understand why you are saying that. Although I would counter to say that unless going for a vocation like teaching, nursing etc, you may question whether it is worth going at all if your plan is to not earn enough to pay it back Saleen836 said:
As far as i'm aware she is going to do a Midwifery course, having the amount of funds I am unsure if she even qualifies for assistance
My wife is a midwife. If that is the case, I would agree with 'somebody' above. Assuming she goes on to marry, have kids etc, she might not pay back the whole student loan.Emperor McDonnell will wipe clean all student debt just a few weeks after the mysterious death of Emperor Corbyn. 
Either way I’m not sure anyone planning a low income career should pre-pay something that they are never likely to need to repay. Not that such an insidious charge on ambition should exist in this country.
Either way I’m not sure anyone planning a low income career should pre-pay something that they are never likely to need to repay. Not that such an insidious charge on ambition should exist in this country.
Saleen836 said:
As title, a good friend that passed away just over 4 years ago and his youngest has just turned 18 meaning she can now have unlimited access to her inheritance. She will be going away to uni and due to the sums involved (approx £70k) she will I believe have to fund most if not all herself, I suggested it might be an idea to purchase a BTL to get a steady income as around the area we live she would be able to buy a 2 bed with a 50ish % mortgage and receive a monthly gross rent of approx £600-700pcm
Is there any chance of her obtaining a BTL mortgage?
I had a similar inheritance at that age (2008) and while at uni with my dad's help secured a joint BTL mortgage on a flat in 2009. It wasn't for income, purely investment. I appreciate Sarnie is the expert but are there still joint BTL mortgages available and anyone could co-sign with her?Is there any chance of her obtaining a BTL mortgage?
Regarding your comment about "she will have to fund most if not all herself" are you referring to the property purchase or the university education? If the latter, that's largely irrelevant. Student loans cover any immediate costs and she has the inheritance to make an informed decision later on whether it's worth paying down the loan in full or treating it as the additional tax it essentially is. That choice will largely be based on her predicted earnings post-graduation.
Gassing Station | Finance | Top of Page | What's New | My Stuff