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Obtaining a mortgage whilst studying for a PhD?

Discussion in 'General Discussion' started by RastaManBob, Nov 14, 2009.

  1. RastaManBob

    Wise Guy

    Joined: Dec 30, 2003

    Posts: 2,223

    Hi,

    Just wondering if anybody has any experience of obtaining a mortgage whilst studying for a PhD? I've read conflicting reports that (a) It is possible as the bank does not care where the money comes from as long as you are able to pay on time and (b) It will be impossible as the only income during a PhD is the stipend which can not contribute towards income.

    Does anybody have experience of which is correct?

    I currently do not have sufficient money to consider getting on the housing ladder however I've always disliked the idea of renting (And have therefore avoided it)... However with PhD funding being so reasonable (£15k tax free) I'm hoping it may be enough to consider buying... Especially considering that (After tax) many of the graduate jobs available pay approximately the same (At least in the first year).

    All of this obviously assumes I can get the deposit from somewhere, but otherwise a quick check seems to suggest that the difference between mortgage repayments and rental is minimal... In which case I'd rather my money did something for me.

    At the moment this is simply ideas floating around in my head for consideration, and may be a purely silly idea - But that's the stimulus for asking and hopefully getting some feedback on here.

    Thanks.
     
  2. Ricochet J

    Capodecina

    Joined: Jun 29, 2004

    Posts: 12,733

    Location: Jumanji

    Depends where you want to buy tbh. If in London, you'd be hard pressed getting a mortgage. Out of curiosity, what PhD are you doing?
     
  3. dangerstat

    Soldato

    Joined: Nov 15, 2008

    Posts: 5,061

    Location: In the ether

    You'll find it *massively* difficult to get a mortgage on a single PhD stipend. At the moment you'll need a 10% deposit, and they will most likely only give youa 3X multiplier on the 15k (so you should be looking at properties at the 45K range if there are any).
     
  4. RastaManBob

    Wise Guy

    Joined: Dec 30, 2003

    Posts: 2,223

    I'm not doing one as we speak however in my final year of undergraduate University (4th year MEng, Electrical and Electronic Engineering)... I'm currently considering the pros and cons of what to do next year and PhD is one of the considerations along with just getting out there and working...

    The main hurdle with the PhD appears to be the issue of it paying a stipend rather than a salary however I don't want to let the oppurtunity of doing a PhD passing me by for this alone so currently trying hard to decide!

    Out of the research divisions available at the University of Nottingham (EEE) I'm more inclined to go with the Optics division however I'm also trying to see if there is anything more suitable at the moment (I'd like to consider something that may overlap with Comp Sci a little more).
     
  5. RastaManBob

    Wise Guy

    Joined: Dec 30, 2003

    Posts: 2,223

    Hopefully (Fingers crossed!) by the time I'd be applying for a mortgage my girlfriend should have managed to obtain a place on a GTP course (Training to become a primary school teacher). This pays around a similar price range I believe however I am also unsure whether this counts as a salary of stipend or other.

    As I said, at the moment nothing is for definite but certainly want to make sure I've considered all avenues.
     
  6. Amleto

    Soldato

    Joined: Feb 13, 2003

    Posts: 5,994

    I tried to get a small 1k loan when I was doing my phd - wanted it to help get a new car. addmittedly I only tried one place, but they said the result would be the same elsewhere: phd grants don't count as income, and unless you have income to afford the repayments, you can't have the loan.
     
    Last edited: Nov 14, 2009
  7. manic_man

    Mobster

    Joined: Oct 18, 2002

    Posts: 2,920

    Location: Greater Manchester

    Although you can rent places using a PhD grant (as you have proof it can be classed as a fixed and determined income) you will not get a mortgage on one. Aside form the fact its a very small amount of money all told, as has been said, mortgage lenders wont treat it like a proper income.

    In my third year at the moment and tbh, if you're thinking of going down the academic route, good on you, I certainly think its worthwhile, but put aside any thoughts of owning a house or flash car for a while ;) Academia != money, though some high profile R&D job after you have finished the PhD could well do of course.
     
  8. RastaManBob

    Wise Guy

    Joined: Dec 30, 2003

    Posts: 2,223

    Assuming you can find the deposit elsewhere and the PhD stipend covers the repayments (Big assumptions but let them stand...) would the the lenders consider it? Or is the fact the money is derived from the stipend a short and sweet "No!"?
     
  9. Amleto

    Soldato

    Joined: Feb 13, 2003

    Posts: 5,994

    ^^ that, unfortunately. But that was just the line from the person I was speaking to at nationwide, and it was a few years ago now ~ 5
     
  10. manic_man

    Mobster

    Joined: Oct 18, 2002

    Posts: 2,920

    Location: Greater Manchester

    This is what I have been told by the few possible lenders I have spoken with.

    TBH though, given its very unlikely you will stay where your PhD is, so you're only in the area for 3 years anyway, I dont know any other PhD student who has bought a house while doing their studies. They all either stay in halls or privately rent.
     
  11. dangerstat

    Soldato

    Joined: Nov 15, 2008

    Posts: 5,061

    Location: In the ether

    My sister did get a mortgage when she was a PhD student (this is many moons ago though) so they *might* consider it. But to be honest in the current climate I think they'll probably laugh you right out of the bank (/building society)
     
  12. RastaManBob

    Wise Guy

    Joined: Dec 30, 2003

    Posts: 2,223

    Thanks for answers all :) At least it's cleared a little up... I s'pose there is no harm in asking if/when the time comes but for now at least I can assume it's a no. Cheers.
     
  13. clv101

    Sgarrista

    Joined: Oct 18, 2002

    Posts: 9,833

    Location: Bristol

    It's not cleared up at all. While doing my PhD I went to a few banks to talk about mortgages, both Natwest and Barclays were able to give me an mortgage in principle. Admittedly my deposit was in the 50-60% region, but they were fine to use my stipend. I also have a friend who bough a house with large fraction mortgage based on his PhD stipend and his partner's teacher salary.


    Edit: Wow, this thread is ages old! Sorry for dragging it up. :eek:
     
  14. Mr Jack

    Capodecina

    Joined: May 19, 2004

    Posts: 12,858

    Location: Kiel, Germany

    I'd be astonished if you can't get a mortgage based on your stipend. In the unlikely event mainstream lenders won't touch you, talk to an independent financial advisor or mortgage broker - they'll be able to find you something.

    They'll probably be stupid and act and ignore the fact it's tax free but they will lend on it.
     
  15. Mr Jack

    Capodecina

    Joined: May 19, 2004

    Posts: 12,858

    Location: Kiel, Germany

    How on earth did you stumble across it?!?

    Also, what did our OP do?
     
  16. Slumberbox

    Gangster

    Joined: Mar 21, 2011

    Posts: 300

    Location: Warrington

    A lot of phd students tend to conduct lectures occasionally, so best to list your occupation as 'lecturer' 1k loan is not a great idea as the rate of interest will be high, best to use a credit card for that as many have 12-15 months interest free on purchases.
     
  17. Dr Delphi

    Hitman

    Joined: Jun 9, 2009

    Posts: 939

    Location: Suffolk

    I managed to get a £2,000 loan whilst I was doing my Ph.D. and had secured it on the stipend I was getting from university - this was only two years ago. In addition one of my friends managed to purchase his first house with a mortgage with his girlfriend - they also used the government first time buyers scheme, and managed to get a very good deal right at the bottom of the crash. It is possible, you need to talk to a mortgage advisor - but in the end your stipend is guaranteed for the whole time you are employed by the university - it is the equivalent of a salary.
     
  18. kiwi

    Wise Guy

    Joined: Jun 30, 2003

    Posts: 2,237

    Location: Sussex

    Equivalent but not a salary - it's temporary by its nature. I'm not saying nowhere takes it into account but my I'm buying a house with my gf who is doing a PhD and Nationwide would only take into account my earnings.
     
  19. grumpysculler

    Wise Guy

    Joined: Nov 23, 2009

    Posts: 1,195

    I did an EngD and twice had to apply for a mortgage during it.

    The first time, it was treated as "other income" and not as a salary which severely cut the amount I could borrow.

    The second time, post-credit-crunch, the mortgage advisor worked out an equivalent gross salary and used that figure on the application as if I was employed. This was on a joint application with my wife.

    Both applications were with the same bank - Lloyds.

    Aside from the amount of the stipend, it may also have helped that I had a secure job at the end of the EngD. The second application was during my final 6 months.

    All you can really do is ask banks and find one that is sympathetic. Or wait until you have a job.

    Edit: Oh FFS holy necro batman!!
     
    Last edited: Feb 20, 2012


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