Could your child BUY a home instead of renting at university?
With tuition fees now sitting at £9,535 a year and average student rent running at around £563 a month, it is no wonder so many parents are asking the same question: is there a smarter way to handle the cost of university?
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If you have been wondering the same thing, you are in the right place. In this episode of On the Ladder, we are taking a closer look at the Buy for University mortgage from Loughborough Building Society, and why it could be a genuine game-changer for students and their families.
So, What Exactly Is a Buy for University Mortgage?
A Buy for University mortgage allows a student (with the support of their family) to purchase a property near their university, rather than simply renting one. The student lives in the property themselves and rents out the spare rooms to fellow students. Those rental payments can then go towards covering the mortgage costs, making the whole arrangement far more financially efficient than paying rent month after month with nothing to show for it at the end.
Think of it this way: instead of handing money to a landlord, your family could be building equity in a property. And when your son or daughter graduates and moves on, that property could be sold or retained as an investment.
Who Can Apply, and What Are the Restrictions?
As with any specialist mortgage product, there are some important criteria and restrictions to be aware of before you get too far ahead of yourself.
The property must have a maximum of three bedrooms, so this is designed for smaller, student-friendly homes rather than large houses of multiple occupation. There are also eligibility requirements around who can apply, so it is well worth speaking to a qualified mortgage adviser to check whether your family situation fits the criteria.
Could the Rental Income Cover the Mortgage Payments?
This is often the question families are most curious about, and the honest answer is: it depends. The rental income from the spare rooms will not always cover the mortgage in full, but in many cases it can significantly reduce the monthly outgoing, or even cover it entirely.
What matters is the local rental market, the size and condition of the property, and how many rooms are being let out. Your mortgage adviser will be able to help you work through the numbers based on your specific circumstances.
Is It the Right Step for Your Family?
A Buy for University mortgage is not the right fit for everyone, but for the right family it can be an incredibly clever use of money that would otherwise simply be spent on rent. It requires a willingness to take on a mortgage, manage a property (even in a small way), and think a few years ahead.
If you are a parent who has been looking at the cost of putting a child through university and wondering whether there is a better way, this is absolutely worth exploring.
Find Out More
You can find out more about the Buy for University mortgage from Loughborough Building Society at theloughborough.co.uk.
And if you found this helpful, do not forget to like, subscribe, and share it with another parent who might be asking the same questions. Pop any questions you have in the comments too; we would love to hear from you.
On the Ladder is our exclusive series for first-time buyers, created by Sarah Tucker, founder of The Mortgage Mum, here to hold your hand through every step of your home-buying journey.
Full Transcript:
What if I told you that instead of renting a property at university, you could buy one instead? Let me tell you all about the Buy for University mortgage.
The Buy for University mortgage is by Loughborough Building Society. Today I’m going to explain what a Buy for University mortgage is, how it works, and whether it could be a smart option if you or your child is at or heading to university.
With tuition fees at £9,520 a year, rising maintenance costs, and average student rents now around £563, as reported by the Save the Students Group in February 2025, going to university is becoming a serious financial decision. The average student leaves with over £60,000 in debt. So if you’re worried about accommodation costs, or wondering if there’s a better long-term option than renting, this video is definitely worth watching.
What is a Buy for University mortgage? It is designed specifically for students who want to buy a property to live in during their university studies. Instead of renting student accommodation, the student buys a home near their university. They live in one room and can rent out the spare rooms to other students, which often helps cover the mortgage payments. It’s important to note that the property can be no more than three bedrooms, due to house of multiple occupancy restrictions. It sits somewhere between a standard residential mortgage and a buy-to-let, but it has its own unique rules.
So how does it work financially? The mortgage is taken out in both the parents’ and the student’s name. The parents act as joint borrowers, but the student becomes the legal owner on the property deeds. This means the student pays no stamp duty as a first-time buyer up to £300,000. The parents don’t come under second home stamp duty obligations because they’re not named on the deeds. Affordability is assessed using the rental income from the spare rooms and the parents’ disposable income after their own financial commitments. And importantly, the mortgage is on an interest-only basis over a maximum of seven years, because it is designed specifically for the student period. You will need a long-term plan for what happens after university, and a mortgage adviser can help you with that.
The lender offers several ways to structure the deposit. The first is a traditional cash deposit of twenty percent, where you provide twenty percent upfront and borrow the remaining eighty percent required to buy the property. The second is a no deposit option, a one hundred percent mortgage, where the lender allows full borrowing if one of the following is used as security: a legal charge over the parents’ property, a twenty percent cash sum placed in a savings account for the seven-year term with interest paid on the savings, or a combination that totals twenty percent of the purchase price across all options.
The benefits are that you avoid the high cost of student accommodation, you choose where you live and who you live with, your rental income can help pay the mortgage, your money is going into an asset rather than rent, and there is potential for long-term capital growth.
As always, there are downsides. As a student, you are taking on the responsibilities of a mortgage. You also take on landlord responsibilities, and property values can fall as well as rise. Any savings placed into the savings account cannot be touched until the lender agrees.
This option isn’t right for everyone, but for some families it can be a really smart way to manage university costs and invest for the future. If you’re considering it, speak with a specialist mortgage adviser who can look at your personal circumstances and guide you through the whole process.
Thank you for watching this special lender episode of On the Ladder. If you have any further questions on this product, use the comments and we will get straight back to you. Thanks for watching and I’ll see you next time.
