Graduate mortgages? Graduate? Don’t think you can get a mortgage?
If you’re about to graduate or have recently done so, then you may not be exactly optimistic about your chances of securing a mortgage.
However, don’t give up because there may be lots of real options open to you.
The background position
True, your worries in this area are not exactly unfounded.
Comparatively few graduates now leave university in a financially sound position. Most are carrying significant student loan and other related debts plus there is a fair chance that during their studies they might have picked up the odd black mark or two on their credit history files. (In fact, a recent article reported how the average student in England leaves university with a whopping £50,000 debt).
On top of that, your real employment history is virtually zero.
Add all those factors together and at least for some mortgage providers, the typical new graduate isn’t an attractive proposition.
Be clear, this is no anti-graduate prejudice!
Some mortgage providers have very strict rules about assessing the risks of a given mortgage application by way of protecting the interests of their investors. Considering some of the above indicators, many graduates are going to look like a poor lending risk in statistical terms.
Some plus points
The first piece of good news is that graduate mortgages really do exist.
The second is that some mortgage providers have set up processes and procedures specifically to try and recognise the difficulties some graduates may find themselves in.
That’s why some graduate mortgages offer attractive benefits that might not typically be available to a standard applicant who has been in the workplace for some years.
Those allowances and attractions might include:
- higher loan-to-value advances (the maximum percentage of an objective valuation of the property under consideration) of up to 95%. This means you will only have to find 5% as the deposit in the transaction;
- a more flexible interpretation of credit history records;
- a reduced demand for evidence of earnings over time;
- initial monthly repayments that are ramped-up as income increases over time.
All of these things may make it possible to find graduate mortgages, providing you have the appropriate assistance of an expert in the marketplace.
Who can benefit?
Theoretically, any graduate could benefit from these potential avenues towards property ownership. However, there are a few facts of life you will need to take into account at the same time:
- if you graduated a little while back, it may be easier to secure this type of funding if you have already found employment and regular income. This might be a slight issue if you’re thinking of extended travel plans (thereby not earning income) immediately after graduation;
- in situations where you are about to graduate or have just graduated, you may still be able to apply and succeed. In these circumstances, providers may be very receptive to graduates who have already secured offers of employment or who have graduated on some form of sponsorship scheme. Both these things show relatively assured income in the immediate future;
- for graduates and those about to graduate who do not come into the sponsored or guaranteed employment categories, the nature of your degree may be a factor.
Those degrees that are traditionally associated with very strong employment prospects, may be more facilitative in securing graduate mortgages. Examples might include Medicine, Engineering, IT, Science, Teaching and the Law.
Some degree qualifications are typically associated with more uncertain post-graduate unemployment prospects and that might influence mortgage providers’ risk assessments. Examples here might cover Art, Literature and Media Studies.
Do note though that these are not fixed and well-defined rules. A high degree of interpretation is used with each individual applicant and having assistance in identifying providers that are most likely to be sympathetic to your individual situation, is typically a sound idea.
The bottom line is simple – it is perfectly possible for new graduates to secure mortgages if they go about it the right way! Why not contact us today at Fogg Financial to see how we can help?