Buying a Property for Your Child at University? This Mortgage Strategy Could Help

Helping Your Child Get on the Property Ladder

I’m Ifthikar Mohamed, a mortgage broker with over a decade of experience in the industry.
Today, I want to share a real case study that shows how a
Joint Borrower Sole Proprietor (JBSP) scheme can be an effective way to help your child
buy their first property, especially when they’re heading to university.

The Client’s Situation

Very recently, a client approached us with a specific goal. They wanted to buy a
property for their son, who was about to start university. The child had no income,
so couldn’t qualify for a mortgage on their own.

University accommodation costs were very high, and the parents felt that money would
be lost rather than invested. Although the parents had sufficient income, the
challenge was finding the right mortgage structure.

The Solution: Joint Borrower Sole Proprietor Scheme

We recommended a Joint Borrower Sole Proprietor (JBSP) mortgage.

• The child is the sole owner of the property and is named on the Land Registry
• The parents are joint borrowers on the mortgage
• The parents’ income is used only to support affordability

This allowed us to secure the mortgage despite the child having no earnings.

How We Structured the Mortgage

Both parents were IT contractors earning a good income. We demonstrated that their
income was sufficient to meet:

• The mortgage on the child’s property
• The parents’ own existing residential mortgage

This was a key requirement for lender approval.

Key Advantages of This Approach

No Expensive Student Accommodation

The child lives in their own property and does not need to pay rent for university or
private accommodation.

No Additional Stamp Duty

Even though the parents are part of the mortgage, they are not owners of the
property. The property is registered only in the child’s name, which avoids the
additional stamp duty surcharge.

Long-Term Investment

The course duration is around five years. Over this period, the property is expected
to increase in value, meaning the family builds equity instead of paying rent.

The Long-Term Plan

Once the child finishes university, the property can be kept as a buy-to-let and
rented to other students in the area. This creates rental income and a long-term
investment asset.

How This Replaces Older Schemes

Previously, parents often used mortgage guarantor schemes. JBSP mortgages now
largely replace these because they are more flexible, avoid additional stamp duty,
and still allow parents to help without owning the property.

Important Disadvantages to Consider

Parents Are Fully Responsible

If the child has no income, the parents are responsible for making the mortgage
payments. If payments are missed, the property could be repossessed.

Loss of First-Time Buyer Status

The child will no longer be considered a first-time buyer. This could result in higher
stamp duty on future purchases.

In this case, the child is studying to become a doctor and is likely to earn a high
income in the future. The property purchased was not low value, so the benefit was
already maximised.

Is This Right for Everyone?

This solution does not work for everyone. It is always best to speak to an
experienced mortgage adviser to review your individual circumstances and understand
both the short-term and long-term implications.

Final Thoughts

If your child is starting university and you are concerned about rising accommodation
costs, a Joint Borrower Sole Proprietor mortgage may be worth considering.

If you have any questions or would like to explore whether this option suits you,
please get in touch with us.

Contact Number: 020 3011 1986

Thank you very much for watching.