Loughborough Building Society is the second lender to launch the product direct-only two years ago after Bath BS. It is offered as a guarantor loan and allows students to live in the property and let out rooms to friends or fellow students.
The product is a half-way point between residential and buy to let, with rental income covering the mortgage payments unless the guarantor element is needed to cover the income gap.
The lender is offering a repayment or interest-only three- or five-year discount both at 4.59 per cent at 80 per cent loan to value (LTV), no early redemption charge and a £999 completion fee or at 100 per cent LTV with a 20 per cent retention on the parent’s home.
Location, location, location
The mortgaged property must be within a 10-mile radius of the university they are attending and in England or Wales only.
When university finishes, borrowers have the option to sell, carry on living in it and take it on after affordability assessment as a residential mortgage, or rent it out and change the loan to a buy to let.
A spokesperson suggested interest in the product tends to peak from July to September for purchases the following year.
Procuration fees are ‘on a par’ with the Loughborough’s other products and the industry, added the spokesperson.
Ashley Pearson, BDM said: “Buy for Uni mortgages have been offered via our direct channel for over two years with great success. I’m really pleased that this product is now available to our panel of directly authorised (DA) intermediaries.
“We’re keen to offer mortgage solutions to borrowers with a range of different circumstances and this is an excellent opportunity for those who in most cases, have never dreamed that they could buy their own home as a student.”
