Can you get a mortgage on a flat?
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Can you get a mortgage on a flat?
Sam Bull talks us through the mortgage process for Can you get a mortgage on a flat.
Can I get a mortgage for a flat?
Yes, you can get a mortgage on a flat. Mortgage lenders have different lending limits, depending on if you plan to live at the flat or let it flat out, in which case you would need a Buy to Let mortgage.
Mortgage lenders also have different lending limits depending on the type of flat – for example a new build flat, high-rise flat, an ex-local authority flat, a freehold flat or even a shared ownership flat.
The property you’re looking to buy will inform the mortgage we can get you. We will get as much information on the property that you’re looking to buy up front before we recommend the most suitable mortgage.
Can a freehold flat have a mortgage?
Most high street mortgage lenders do not actually lend against freehold flats. We work with specialist mortgage lenders who consider lending against freehold flats and maisonettes. It’s subject to additional mortgage lender criteria which we would review. Mortgage lenders would review the freehold flat on its own merits.
Is it difficult to get a mortgage on a freehold flat?
Because there are fewer mortgage lenders who will consider lending against freehold flats, there are not as many options to look at. It can be a little bit more difficult to arrange a mortgage on a freehold flat, simply because there aren’t as many lenders to work with.
Mortgage lenders are happy to lend against flats in general and once we know the type of flat that you’re looking to buy, we’ll be able to find a suitable mortgage.
Why do mortgage lenders have an issue with freehold flats?
There are certain risks associated with freehold flats that mortgage lenders need to assess. There are five main risks, as follows:
- Ownership structure. In some cases, freehold flats may be part of larger properties or converted from older buildings. These can make the ownership structure more complex than a typical leasehold flat. This can raise concerns with mortgage lenders.
- Management and maintenance. The responsibility for property maintenance and other costs is shared among the owners of freehold flats. The mortgage lender may want to ensure there are clear agreements in place to cover these expenses. Poorly managed properties can impact the resale value of the property.
- Valuation and resale value. So value in freehold flats can be more challenging to valuers because there aren’t many comparable properties. Mortgage lenders need to assess the resale value to determine the property’s worth, in case they need to repossess the property.
- Legal issues. The legal and title issues related to freehold flats can be more complex. Mortgage lenders want to make sure that there are no outstanding legal disputes or complications that could affect the property’s ownership if they had to repossess it.
- Market demand. In some areas, leasehold flats are just more common, and therefore have a much higher demand. That may again have an impact on a mortgage lender’s willingness to lend against a freehold flat.
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Everyone’s different. You might be self-employed. You might have some credit history issues – whatever your situation, we will find the most suitable product available to you from across the whole market.
How big does a flat need to be for a mortgage? Does it matter about the size?
There are mortgage lenders who need studio flats to have a minimum size of 30 square metres, but most lenders have no restrictions on the size of the flat. They just rely on the valuation to confirm if the property is suitable security.
Is it worth buying a flat before a house?
This will just come down to your specific requirements. Mortgage lenders are happy to lend against houses and they’re happy to lend against flats. We can arrange a mortgage for clients under both circumstances.
Can I get a 95% mortgage on a flat?
Yes, mortgage lenders can lend up to 95% loan to value against a flat, if you’re buying to live in it. If the flat is an investment on Buy to Let, most mortgage lenders will go up to 75% loan to value.
Mortgage lenders will review the specific type of flat, which could affect the maximum loan to value.
Is it a good idea to buy the freehold to my flat?
Buying the freehold to your flat usually comes with a large upfront cost, but there are benefits to buying the freehold.
It could cost tens of thousands of pounds to buy the freehold to your flat. But if you can afford to make that upfront investment, it would give you increased rights over how the property is managed.
It will also mean you’re no longer subject to paying ground rent and service charges or even costs for lease extensions. As a result, the overall value of your flat may increase. So although there’s a large cost, there are definitely benefits to buying the freehold to your flat.
Are flats still a good investment?
Yes, and as with any property purchase you need to consider the usual factors, such as the type of flat, its age and condition. The location of the flat is probably the most important factor – that will have an impact on the current value and the future potential value of the property you’re looking to buy.
Are flats cheaper to buy than houses? How much does it cost to mortgage a flat?
Flats are usually leasehold properties and solicitors’ fees on those are a few hundred pounds more expensive than a traditional freehold purchase. Apart from that, it’s broadly the same.
Mortgage lenders’ interest rates are the same regardless of whether you’re buying a house or a flat. So in that sense, it’s not any more expensive to buy a flat than a house.
Is it better to buy a flat or a house as a First Time Buyer?
Flats can be a very attractive purchase for First Time Buyers because they’ve often got really good city centre locations. They’ve got good commuting links for work. Mortgage-wise, the process is very similar. We’d be happy to arrange mortgages for First Time Buyers on flats or houses.
How do I get a mortgage on a flat? What’s the process?
Speak with a professional mortgage broker when looking to take out a mortgage on a flat, as we can recommend the most appropriate mortgage for the property.
Often First Time Buyers and home movers don’t realise that there are lots of different types of flats. If you can show your broker the details on the property you’re looking to buy, we’d be able to advise you and make sure that you’re not going to have any issues with the mortgage.
Your home may be repossessed if you do not keep up with your mortgage repayments.
