Graduate Mortages

Graduate mortgages are mortgage deals for university graduates.

University graduates will typically have a higher salary than average. They also typically have high debts after they graduate. Current property prices make it almost impossible for them to get onto the property ladder. Mortgage lenders are trying to draw graduates to the housing market. That is the reason why they have introduced special mortgages for graduates.

Advantages and disadvantages of graduate mortgages

Advantages

You could be able to afford a property immediately after you graduate

You could be able to apply for a bigger mortgage, and be offered reduced fees.

Disadvantages

The interest rates for graduates mortgage are in most cases not the best ones on the market

You could be tempted to apply for a mortgage you cannot really afford, particularly if you career doesn’t take off.

Who can apply for a graduate mortgage?

The requirements are different for each lender, but typicallyyou will be expected to have a full university degree (e.g. BSc or BA) and be less than 35 years old.

Most mortgage providers also only propose graduate mortgages for 5 to 7 years after the graduation date. Some lenders do not impose this restriction.

Why should I apply for a graduate mortgage?

Almost a quarter of students live with their parents after they have graduated as they cannot afford to buy a house. The high deposits required make it hard to afford a mortgage if you have university debts.

Many factors make it difficult for first-time buyers to afford a mortgage these days:

• 100%+ mortgages are not offered by lenders anymore
• Lenders normally require high deposits and offer less money than they used to
• The maximum LTV percentage is smaller than before for most lenders
• The average deposit requires typically 5 years of savings.

Because of these factors, the number of first-time buyers today is almost half what it was 10 years ago.

Lenders understand that as a universitygraduate you are very likely to have a high salary in the future. They therefore feel more confident in offering universitygraduate a mortgage with a higher loan-to-value percentage and a smaller deposit than other mortgages.

What are the benefits of graduate mortgages?

There are interesting benefits with graduate mortgages:

• Higher loan-to-value (up to 95%). With the credit crunch, 100%+ mortgages are not available anymore
• Discounted interest rate at the start of your mortgage term

Graduate mortgages are available as interest-only or tracker mortgages. It is vital that you speak with an independent financial adviser to understand what is the best available deal depending on your current circumstances.

Why have mortage lenders introduced graduate mortgages?

Because of the higher potential salary, university graduates are usually good customers to have. The risk of not being able to repay the mortgage is lower than non graduates, and they hope to keep you as a customer for the future, so that you will use their services if you decide to apply for further mortgages or investments.

Are there risks in getting a graduate mortgage?

Because mortgage providers offer bigger mortgages to university graduates, you have to make sure you can repay your loan as your career takes off. It is therefore important that you speak with a financial adviser to see how much money you can easonably borrow based on your current situation and your career plan.

How can I apply for a graduate mortgage?

Fill in the form on this site and an independent mortgage adviser will get in touch to answer all your queries and provide you with mortgage advice.