The mortgage broker arm of Foxtons Group claims more students’ parents are purchasing buy to lets to help out their offspring.
Alexander Hall analysed the monthly cost of a mortgage across each postcode of the top 100 UK universities before comparing this with the average monthly rent to highlight where investing in property can make the most financial sense.
The University of Sunderland ranks as the most affordable of the top 100 UK universities for mortgage market accessibility.
The average house price in the SR1 postcode, home to the University of Sunderland comes in at £59,454, with a 15% mortgage deposit totalling £8,918. With a mortgage loan required of £50,535, this means the average monthly full mortgage repayment comes in at just £275 per month based on the average mortgage rate of 4.21% over a 25 year term. There are also options available to buy a home for university let with no deposit.
Other universities offering strong affordability for students where the average monthly mortgage payment is concerned include the Teesside University (£361 per month) and the University of Aberdeen (£435 per month).
However, when it comes to the biggest boost to affordability when comparing the average monthly mortgage payment to the average cost of renting, Glasgow Caledonian University is top of the class.
The average monthly cost of a mortgage repayment in the university’s G4 postcode comes in at £806 per month, £535 per month cheaper than the average monthly cost of renting at £1,341.
Other universities offering strong savings where the difference between mortgage and rent is greatest include the University of Strathclyde in Glasgow’s G1 postcode (-£502), followed by the University of Leeds in LS2 (-£488), Newcastle University (-£484), Newcastle University and Northumbria University (-£484), the University of Sunderland in SR1 (-£397), University of South Wales (-£396), Cardiff University (-£371), Nottingham Trent University (-£356), and the University of Nottingham (-£355).
A spokesperson for Alexander Hall says: “We’ve seen a growing trend of parents opting to help alleviate this strain by investing in a property for their child, and for many, this parental support is essential.
“There are many ways parents can support adult children onto the ladder, for example through joint borrower, sole proprietor options or regulated buy to let which allow family members to live in the property or specific ‘buy for university’ products which don’t even require a deposit.
“This allows students to access housing without overstretching on rent, benefit from the lower cost of a mortgage repayment, and start building equity in a property. It’s a practical way for students to get ahead while studying and helps them take their first steps on the property ladder before they’ve even graduated.
“It’s also important to note that, whilst the wider cost of renting a property at university is often shared by multiple students within the same household, the same also goes for investing in a property for your child giving them the opportunity to let to other students, helping to further reduce the mortgage costs associated with the property.”
