Mortgage Ex Local Authority Flat
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Mortgage Ex Local Authority Flat
Sam Bull talks us through the Mortgage process on ex local authority flats.
How does a mortgage for an ex local authority flat work?
It’s like any other mortgage. You will take out a standard mortgage product. The lender will rely on the valuation for mortgage purposes, to make sure that the ex local authority flat is suitable security for them to lend on. That all works in the same way as other mortgages.
How do mortgage lenders view ex local authority flats?
Many mortgage lenders are generally happy to lend on an ex local authority flat, subject to an acceptable valuation. There are, however, certain risks to mortgage lenders that specifically apply with these types of flats, and surveyors carrying out the valuation will consider a few specific points.
They’re going to consider the location of the property and its appeal to potential buyers. They will assess the percentage of private ownership within the ex local authority block. They’ll consider the construction of the block and the re-saleability of the flat itself.
What challenges may arise when trying to secure a mortgage for an ex local authority flat?
Some mortgage lenders will require the ex local authority block to have a minimum percentage of properties under private ownership. A block with low owner occupancy may present a challenge with some lenders.
Some ex local authority flats may have structural issues that could impact on securing a mortgage. For example, lenders are often cautious on blocks made out of concrete. If the block of local authority flats is over five storeys, some mortgage lenders may not lend on it. They may have the view that the height of the building could impact the saleability of the property.
Some ex local authority flats have what’s called ‘deck access,’ which means there’s a balcony on each level for access to the apartments’ front doors. Certain mortgage lenders consider flats with deck access to have an increased security risk, so that can also impact resale.
How can I ensure I’m getting the right mortgage deal for an ex local authority flat?
Because mortgage lenders are looking for very specific things, it’s important to speak with a mortgage broker like ourselves. We’ve got lots of experience in securing mortgages against these types of flats.
We would carry out a fact find in the initial appointment. We’ll find out all about the client’s personal circumstances and get the full property details. We’ll ask questions about the number of storeys, if the block has a lift and if there is deck access. We’ll explore the construction of the block.
Then we’ll speak with mortgage lenders before we actually make a recommendation, to make sure that the lender’s going to be happy with that property before we actually apply.
What type of deposit is required when purchasing an ex local authority flat?
The minimum deposit lenders accept generally is 5% of the purchase price. However, each mortgage lender will have a maximum loan to value when lending against ex local authority flats.
So while you may be able to proceed with as little as a 5% deposit, some mortgage lenders may require a 10%, 15% or even a 25% deposit. Each lender will be slightly different on this.
How does the location of an ex local authority flat impact the mortgage process?
The location of the flat itself can have a significant impact. Lenders generally prefer properties where there’s high demand, especially when lending against ex local authority flats.
The best options are flats in well-maintained, sought after locations with good schools and good transport links. As these will be in higher demand, we could potentially get more favourable terms.
On the other hand, flats in less desirable or economically challenged areas could face stricter lending criteria and higher interest rates – or even a limited number of mortgage options.
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What factors should I consider when purchasing an ex local authority flat with a mortgage?
You’ll need to consider the location of the property and the overall condition of the block of flats. You’ll also need to check the lease details of the property. Find out how many years are remaining on the lease and if there’s any service charge or ground rents that may be applicable.
Depending on how many storeys are in the block you might want to consider whether the flat has a lift. It’s also worth checking what the parking arrangements are when buying an ex local authority flat.
What are the benefits and drawbacks of purchasing an ex local authority flat with a mortgage?
On the positive side, ex local authority flats are often more affordable than private flats. You might get better value for money and these types of flats are often situated in well-established neighbourhoods. They’ve usually got convenient access to public amenities, public transport, schools and doctors’ surgeries. Generally, locations can be good.
There are some potential drawbacks as well. The maintenance of ex local authority buildings might not be up to the same standard as private developments. Resale values could also be affected. Some buyers might perceive ex local authority flats as less desirable, which could make a mortgage on the property a little more expensive.
We would always advise our clients to do proper research on the flat that you’re looking to buy. Research the location and any associated costs before making a decision to buy the property.
What are the common mistakes people make when taking out a mortgage for an ex local authority flat?
We have clients who just make an application online to the cheapest mortgage lender that they find. In doing so, they’ve not checked out the lender’s criteria on the property itself. They may have paid an application fee or valuation fee which won’t be refunded if the mortgage application is then declined.
To avoid paying these unnecessary valuation and application fees, speak with a mortgage broker like ourselves. We’ve got experience in helping people buy ex local authority flats and we’ll give you all the advice that you need to get the best possible mortgage on the market.
How do you decide the right mortgage term and interest rate for an ex local authority flat?
With any mortgage query, we do an initial appointment with the client and carry out a full fact find. We’ll get to know your mortgage requirements, your budget, how much deposit you have and the fees that will be affordable.
Then we make an appropriate mortgage recommendation, which will include advice on the mortgage term and the best interest rate to suit your needs. We’ll give you all that support to decide on different mortgage options.
Your home may be repossessed if you do not keep up with your mortgage repayments.