Apartment mortgages – How to get a mortgage on apartments in the UK

There are many things to consider when looking for a mortgage to buy an apartment.

If you want an apartment, it is best to get assistance from a mortgage broker.

Speaking with an independent mortgage broker will give you free mortgage advice, and they will know a few mortgage providers lending the residential mortgage you require.

Is it possible to get a mortgage for an apartment?

Yes, it is possible to have a mortgage approved for an apartment.

This type of financing is quite common and is possible. However, it can be more complicated than getting a mortgage for a house. A mortgage broker can guide you in the right direction and provide mortgage advice.

However, applying for a loan for a flat is the same process as for a home. Your mortgage broker will help you to determine your affordability and eligibility factors before searching for potential lenders whose lender criteria you will match.

Speak with an exclusive mortgage expert here today.

What makes it different from standard properties?

An apartment is a living quarter in a larger property with separate homes. Therefore, mortgage providers will need more information about this type of nonstandard building to determine if it is suitable for mortgaging.

Different types of apartments have other implications

Each apartment will be evaluated based on its unique characteristics. Then, offers will be made. Many specialist finance lenders won’t lend a loan to buy a new-build flat. They view them as more expensive, and their value will drop immediately after selling them.

There are other examples of lenders that are open to mortgaging but may be more careful about:

• Studio apartments: These one-room apartments are typically smaller than standard apartments and thus cost much less. Lenders can turn down mortgages for studio apartments if they do not have the required minimum square footage.
• Apartments located above/within the commercial buildings: Apartments above shops or food outlets may have security issues. Lenders might insist on a valuation report before lending on it. Some banks may even require that the property and the commercial area have one floor.
• Ex council flats: Lenders must be assured of the ex-local authority home’s resale price. These rules could include balconies, storey heights, private ownership precedent and communal gardens. They may also establish minimum property values or floor areas.
• Basement apartments While these aren’t too contentious for lenders, many still prefer to see a report about the property before committing.
• Numbers of storeys: The criteria for this vary from lender to lender. Some lenders would not accept more than five storeys if they were built before 2000. Others may require a lower loan to value for more than four or three storeys. Lifts are required for any more than three or more storeys. Seven storeys can be accepted, but with conditions. Maximum 20 floors. Maximum three floors.

Leasehold and freehold

There are leasehold apartments and freehold ones.

Whichever category your property falls into will impact your chances of getting a mortgage. Lenders prefer leasehold flats because they mean that the land is owned by one person (and you are ‘leasing it), making it much simpler to determine who is responsible.

Although there aren’t many lenders who will approve a residential loan on a freehold apartment, there are still some who will. Keep in mind that the remaining leasehold term will be considered in your mortgage application.

This means there may be fewer mortgage options than if the lease had been in force for many years. It is better to have more than 100 years remaining.

How can a broker help you secure the financing you need for an apartment?

Even though your application may be complex, an experienced mortgage advisor, a mortgage introducer, can help you make the right decision and most lenders who will accommodate you.

Although it might seem easy to get a loan for an apartment, due to the significant differences in the types of buildings available, it can be challenging.

A good broker can tell you which lenders are flexible and adaptable in apartment lending and how to approach the application process. A neutral broker like the one we work with will help you understand the property’s details and feasibility.

They will also assist you in strengthening your mortgage application. To learn more about apartment mortgages, continue your journey here.

Is it possible to get a mortgage for an apartment with cladding?

It is much more challenging to obtain a mortgage for apartments in tower blocks with cladding than before the 2017 Grenfell Tower fire. However, it is possible. The issue is split roughly between banks, with some lending institutions granting conditions and others refusing to accept applications.

You will need to have some quality assurances, such as EWS1 forms, an A3 or a B2 rating, positive valuers reports, or meet the Ministry of Housing, Communities and Local Government guidelines.

Sometimes, the criteria include the height of the storeys and the date the property was built. For example, Barclays assumes properties constructed after January 1, 2020, have cladding that meets current fire safety regulations.

Speak with a specialist lender here.

What kinds of mortgages are available for apartments?

There are many types of mortgages available, just like houses. The standard residential repayment mortgage requires you to pay off the flat’s cost and interest over a specific term.

Or, the interest-only residential mortgage allows you to pay the interest accrued each month until the end. Apartments are more attractive than houses for mortgages.

Flats are also eligible for buy-to-let or commercial mortgages. These mortgages are subject to the usual eligibility criteria.

You might need to show that you will receive a minimum of 125-130% return on your buy-to-let mortgage payments. Commercial interest rates may be higher.

What is the maximum amount you can borrow?

Apartment borrowing is just as affordable as regular mortgages. Banks will examine your approximate annual income and expenses to determine whether the loan amount can be approved to get a mortgage.

To estimate the amount you can borrow to buy an apartment, enter your annual salary into an online mortgage calculator. Contact our mortgage brokers to speak with an online mortgage advisor if you prefer to be straight to the point.

Criteria for eligibility

Although the range of loan-to-value mortgages available for apartments is similar to houses, there are fewer options. Some lenders may offer a 95% loan to value ratio. This means that you will only need a deposit of 5%.

Others might offer a deposit of 60% or 70%. You’ll need a 30-40% down payment.

To be clear, three mortgage lenders offer 60% loan-to-value ratios at the bottom, while about 20 at the top offer 95%. But, don’t forget that each lender has its restrictions and criteria, as we have already explained.

Is it possible to get a mortgage loan on an apartment building?

This is an option for those who want to purchase a whole building in commercial freehold ownership. This is a multi-unit block, and the interest rates are higher. The loan-to-value is usually lower than average but still a solid 75%.

Talk to an experienced broker in apartment mortgages

Our specialists have extensive experience securing apartment loans for clients of all types, including those with different income brackets, buildings, and loan terms.

They are familiar with all the possible scenarios and know how to overcome them. They will be able to help you in your situation.

To match you with a broker who has been rated five stars, contact us today. We will help you to determine what support you require and what you want. The right broker has access to the whole market and the contacts to make your application successful.

FAQs

Can I get a mortgage for a 1-bedroom apartment?

It is possible, provided that all conditions and criteria are met. One-bedroom apartments are usually larger than studios.

Studios have their own rules, such as minimum sizes, but getting mortgage financing is still possible. So one-bedroom flats should be considered more eligible.