Flying Freehold Mortgage
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Flying Freehold Mortgage
Sam Bull talks us through the Flying Freehold Mortgage.
What Is a flying freehold?
So a flying freehold is where a part of one freehold property extends over or under another person’s property, so this can be the full property that’s a hundred percent physically located over or under another person’s property or it could be just a percentage of the property that’s over or under someone else’s property.
For example, some properties might have a bedroom that overhangs their neighbour’s garage and therefore the upper property owner does not own the building or the land underneath the flying part.
Can I get a mortgage for a property with a flying freehold
The good news is yes, it is possible to get a mortgage on a property with a flying freehold, now not all mortgage lenders will lend against properties with flying freeholds and it’s important to get the right mortgage advice.
Before considering lending against these types of properties mortgage lenders will rely on the valuer’s recommendations and the solicitor’s confirmation that the property title is good and marketable. So it’s advisable to work with a knowledgeable mortgage broker and a really good solicitor who has experience in these types of property arrangements.
What if I’m a first-time buyer does it affect getting a mortgage for a property with a flying freehold?
No, there’s no difference in being a first-time Buyer; it doesn’t affect you buying a property with a flying freehold. Mortgage lenders will assess your income, expenditure and your credit history just as as they would on any normal mortgage application. Then the lender is going to instruct a valuation for mortgage purposes, the lender will rely on the valuer’s recommendation when deciding to lend against that specific property.
What if I have bad credit?
If you have had any bad credit in the last six years we will need a copy of your credit report before making a suitable mortgage recommendation. We generally recommend a credit reference agency called Check My File. With a Check My File credit report it shows your Experian, your Equifax and your Transunion credit files all under one report. So we recommend you get a copy of your credit report and then depending on the severity of your bad credit, and when the credit was noted on the credit file, we would then again be able to make a suitable mortgage recommendation.
Then if you’re getting a mortgage on a property with a flying freehold that will just come down to the valuer’s recommendation to the lender.
What about if I’m self-employed?
There’s no difference being self-employed, it will not affect you buying a property with a flying freehold. Mortgage lenders will generally want to see your latest 3 years personal tax returns or if you’re limited, they’ll want to see your latest 3 years limited company accounts. They’ll use that information to work out how much you can borrow if you are self-employed mortgage lenders will also review your latest three months bank statements and they do that to make sure that you still trade inline with your most recent accounts.
Then in regards to the flying freehold, the mortgage lender is going to rely on the valuer’s recommendation to decide if they’re going to lend against that specific property.
Are there any issues when remortgaging a property with a flying freehold?
Re-mortgaging a property with a flying freehold tends to be more straightforward than the initial purchase and that’s because there are likely to be existing covenants in place and you’re also likely to going to have an established relationship with the neighbour involved in the flying freehold.
In the event that the connected property changes ownership prior to you remortgaging then it’s recommended to reach out to your solicitor who assisted you with the original home purchase. They can arrange the new covenants to be established and again speaking with a mortgage broker is always advisable because they’re going to help find you the most suitable deal because not all mortgage lenders do lend on properties with flying freehold. So It’s important to get the right advice.
Can I get a buy to let mortgage on a flying freehold property?
Yes, you can get a buy to let mortgage on a property with a flying freehold the process is very similar to getting a residential mortgage on these types of properties. The mortgage lender will just rely on the valuer’s recommendation to make sure that the property is suitable and then with regards to it being buy to let this will be subject to normal buy to let criteria.
Part of our initial appointment with you we’re going to carry out a fact find. We’ll get to know about your income, your expenditure and your existing buy to let portfolio. Then we’ll make sure that we give you the right advice and recommend a lender where you fit their buy to let criteria.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
Your home may be repossessed if you do not keep up with your mortgage repayments.
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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.
Flying Freehold Mortgage
(Part 2)
We continue the conversation about a flying freehold mortgage with Sam Bull.
Flying Freehold Mortgage
We continue the conversation about a flying freehold mortgage with Sam Bull.
Do I need indemnity insurance to get a mortgage on a flying freehold?
When buying a house with a flying freehold, most mortgage lenders will need you to take out flying freehold indemnity insurance. They usually put that as a condition on the mortgage offer – and this is important because it protects both you and the mortgage lender against any potential future legal costs or repairs.
That policy usually costs around £200 and you only have to pay once for the entire time that you own the property. The policy will be set up by your conveying solicitor.
Will conveyancing take longer on a flying freehold?
The legal work may take slightly longer when buying a house with a flying freehold as your solicitor will need to carry out additional checks. They’ll need to arrange the indemnity policy we just spoke about.
It might only be an additional few weeks. It’s not going to be months and months of additional work.
Is there anything else that could affect my chances of getting a mortgage for a flying freehold?
As we said before, the valuation is important, as is confirming that the property is suitable security and a good title. Then it’s all the usual things – you need to make sure that your credit history is good and you’re making all your payments on time for any credit cards and loans. Stay within any overdraft limits you may have. Don’t take out any additional credit and particularly not payday loans. The usual things, really.
It’s also worth noting that some mortgage lenders put a maximum acceptable percentage of the gross floor space taken up by the flying element of the property. Some lenders may only accept a flying freehold up to a maximum gross floor area of 10%, 15% or 20% of the property. But there are plenty of mortgage lenders who have no limit and can actually accept 100% flying freehold.
Have you secured many mortgages from clients on a flying freehold?
Yes, we’ve secured lots of mortgages for clients buying property with a flying freehold. That’s partly because in Holmfirth, one of the areas that we look after, it’s quite common. There are quite a lot of properties with flying freehold. So it’s something we’re well used to dealing with.
How early should I speak to a mortgage broker like yourselves on this type of property?
We would recommend speaking to a mortgage broker like ourselves before you actually view the property. We can give you advice on how much you can borrow, what you can expect your monthly payments to be, and give you an idea on the fees. We can also explore any potential issues that you might face specifically when buying a property with a flying freehold.
What’s the difference between using a mortgage broker like JB Mortgages versus going to a bank for a mortgage on a flying freehold?
Not all banks lend on properties with a flying freehold, so it’s always best to speak to a mortgage broker like ourselves. We’ve got access to over 100 mortgage lenders. We can shop around and recommend a suitable mortgage with a lender that’s happy with you buying a house with a flying freehold.
Your home may be repossessed if you do not keep up with your mortgage repayments.
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