100 per cent student deal courts controversy

Ramesh Sharma

March 18, 2006

The product, available to students at Bristol University, allows the purchaser a 100 per cent mortgage on properties worth up to £250,000, with repayments covered by renting out the other rooms in the property.

The Buy-for-Uni two-year discount is available at 5.40 per cent for two years, before switching to 6.50 per cent. The Buy-for-Uni three-year discount rate is available at 5.40 per cent for three years, switching to 6.50 per cent thereafter. Both are available at 100 per cent LTV and are only available through direct routes, a factor Rob Clifford, managing director at Mortgageforce, admitted was disappointing. “The product is very bespoke and limited to a set audience. It’s disappointing that the product excludes broker channels but by the look of it, it does not have a wide audience. If this were to change then more retail and intermediary channels would probably be used.”

However Harry Katz, partner at Norwest Consultants, blasted the decision to launch a 100 per cent product to students. He said: “I suppose it’s okay if mum or dad want to buy an investment property for use by their student offspring, but I don’t agree with encouraging students to buy themselves. The rental won’t cover the mortgage. Take a property of £200,000. Monthly repayment at initial rate on a capital and interest loan is £1,216, without life cover. How many students do you need to make rent affordable? Four would make it cosy in a two-bedroom flat, each paying £300 per month.”

Malcolm Graham-Jones, head of lending at Bath Building Society, said: “Although we would accept an application from an introducer there is no proc fee payable.” He added the range had attracted a lot of interest since its launch.

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