He will be studying in Surrey the prices are steep, we've got a good price on the flat though which is on the train line so he can get a quick train in to town and the flat is tiny, hopefully if it all goes through he'll be ok.

Wow ! Where's he going to be studying - the rental returns are obviously fantastic ! They sound like London room rent prices but the flat you're thinking of buying obviously isn't in London.

Thanks for your advise the rent around where he will be studying is actually between £500 - £750 for a room in a house let alone a flat, there isn't any student accommodation as such thats why we are going this route, we looked at having a bigger flat to rent other rooms but they were just too expensive and couldn't risk not being able to fill the other room, if he was already there and had mates he could accommodate it would be different.

If i was you i would go for a flat that you can enable your son to rent out rooms to his friends therefore covering your mortgage

I would also go for a long term fixed interest only that way you know what you are paying until your son is finished uni.

A £95000 flat would cost £450 approx interest only, students pay at least £250 for a room now if it has more than one bedroom you are laughing - even if its one bedroom £450 isnt too bad

If you put him on the deeds and mortgage when you buy his third of any gain will be tax free as he will be living there as his PPR. He'll need a decent salary (£30k) at the end of his degree to take the mortgage over in his own right plus a 10% equity stake at least. That looks like a high salary for an area where flats only cost just over £100k. If he wants to take it on at the end and rent it out he'll need a 25% equity share and rent of 125% (or something like) of mortgage to qualify for a buy to let loan.

The downside to putting him on the deeds is that if the property market doesn't pick up and you end up in negative equity he will be jointly liable for that debt - not a good way to start post uni life. Rent may seem like wasting your money but at least there are no ties and you haven't got the risk of house prices falling further and ending up with a loss. Property is supposed to be a long term proposition and three years is a very short timescale.

Would it be cheaper (and more fun) for him to find a room in a shared house ?

Hi we have thought of that, but we are not really doing it to make money only really to prevent us from wasting it as rents in the area were equal to or more expensive than the mortgage.

We are considering signing property over to our son once he has finished his degree and if by any luck he gains employment as a result. Don't know whether it is better to add him to the mortgage now when we buy or not.

Not sure that what Somerled says about the interest on the second property is right. You can offset the interest against any rent received from your son but only capital costs are allowable for CGT purposes. The buying and selling costs (legals, valuations, stamp duty, estate agents fees etc) are OK as deductions but the only other deductions are for improvements to the property (not including repairs and maintenance). You do need to keep good records.

Have you thought about buying a bigger house and getting your son to sublet / share with friends ? That would may be a better long term investment as you could continue to let it after your son has left uni.

Thanks very much for your advice, will have to look in to the Capital Gains Tax issue.

Hi, your figures are certainly good and promising and you have my sympathy as there are a few options open to you and everyone will no doubt tell you that 'theirs' is the best way to go! At the end of the day, follow your own instincts as to what 'feels' right for you personally. Dummies don't earn joint incomes of £100K!

As you are already committed to a £1400 monthly mortgage repayment, I personally would suggest that you pay off any expensive credit cards BEFORE committing your finances to a further mortgage of £95k plus. Remember also that if you do decide to sell the property after three years and presuming there is a profit to be made by then, you will be liable to capital gains tax. Mortgage interest can be set against this and so it is important for you to keep complete records of expenditure toward this 'second property'.

Good luck with whatever you decide.

Hi

We are just about to buy a flat for my son to live in whilst he is studying it is slightly cheaper than renting and at least we will have a property at the end of the 3yrs to sell and hopefully have a small profit.

The problem we have is we can have a mortgage no problem with our current mortgage provider Nationwide, but because we can only produce a 15% deposit the majority of which is from a flexible advance on our own mortgage the rate is fairly high. We have only 8yrs left on our mortgage but are looking to get the mortgage for the flat over 25-29yrs we know we only want the flat for 3yrs unless my son takes over the payments himself after that, either way 3yrs is our goal. We need a mortgage for £95200 for the flat, our current mortgage on our home is approx. £177000 and we pay around £1400 per month, our joint income is approx. £100000 we payout approx £2400 per month in credit cards and a loan.

I've been comparing mortgages and now I'm more confused and I don't know who to trust alot of the cheaper rates are from companies I've never heard of how do you know who to trust?

The other thing we were thinking of doing is borrowing more on our flexible loan to pay off the majority of our credit cards to try and help with the monthly payments.

Really confused could do with some advice.

Thanks