People returning to UK universities to undertake PhDs in the days and weeks ahead could collectively waste up to a quarter of a billion pounds in rent over the next four years, according to new research by a specialist higher education mortgage broker.
Assuming an estimated 12.5k new PhD candidates spend £5,000 a year on rent for four years, they will have squandered £250m on rent, according to Manchester-based Jamie Thompson of Jamie Thompson Mortgages — when, in many cases, they could have owned their homes using their stipend as an income. Jamie says:
What those receiving a stipend don’t realise is that, instead of renting, they could buy their own home. Though most high street banks will laugh PhD candidates out of the branch if they try to get a mortgage using their stipend, specialist mortgage brokers can help PhD candidates escape the rent trap and become homeowners. Best of all, their mortgage payments are typically less than what their rent would have been on the same property.
Jamie says a PhD candidate on a typical stipend of £15,600 could borrow enough to buy a flat in a northern university town, perhaps even a 2-bed house in the North East. Equally, two PhD candidates buying together could borrow twice as much even with no ‘regular’ income. It can be done with a deposit as small as 5%.
Jamie adds that it’s also commonplace for PhD candidates to be partnered with a working professional. In this instance, he says there a few lenders that will take into account the PhD candidate’s stipend on top of their partner’s salary, which could increase what a couple could borrow by an extra £65,000 to £100,000, depending on their exact circumstances. He adds:
Most mortgage brokers will tell you it’s not possible to get a mortgage with a stipend. But since specialising in this niche field of the mortgage market I’ve even surprised myself with what’s possible. For example, a PhD candidate in the final year of her research and due to go on maternity leave was able to use her stipend alongside her husband’s salary to buy their first home in Hampshire.
Jamie concludes that those who take advantage of putting their stipend towards buying a home will also come out of their studies not just with a PhD but a property in a prime location. This can either then be let out to future students or PhD candidates, or be sold to help fund a deposit on their next home. He concludes:
Stipends are as safe, if not safer, than salaries in many cases. And why wouldn’t a bank want to lend to somebody who’s going to go on to have such good earning potential in just a few years’ time? My goal is to get the message out there that doing a PhD is not a sentence to four years in the rental trap."