The Loughborough Building Society is launching a Buy For Uni mortgage product seeking to encourage students to buy a home - with help from parents, a step-parent or grandparents - rather than rent during their study period.
Then by letting out spare rooms in the house to friends or fellow students, the student-owner can cover the cost of servicing the mortgage.
The society says the mortgage comes with a range of options that mean family members can make it possible for a student - even one with no direct income - to become a home owner.
The product is open to 18 year olds and older UK-resident students, so long as they are in higher education somewhere in England and Wales. The society lend up to 100 per cent of the value of the property, up to a maximum £300,000.
As with conventional buy to let mortgage applications, the precise limit depends on income predicted to be achieved from letting rooms within the property.
“Where there is insufficient rental income to support the mortgage, we will consider the income of the family member(s) supporting you, after the deduction of financial commitments. Acceptable family members include parent(s), step-parent and grandparent(s)” says the society.
On loans greater than 80 per cent of the value of the property, the society also requires the family member to use their savings to help the buyer, achieved through the family member depositing cash in a specifically-designed savings account with the society.
Likewise, instead of the savings account, for loans above 80 per cent the family member could agree to some of the equity in their own property being used as security - a ‘legal charge’.
The property on which the mortgage is sought must be within a 10 mile radius of the university being attended by the student-buyer, and must have a maximum of four bedrooms if two-storey or three bedrooms if three-storey. Ex-council properties and smaller private properties are excluded.