Getting a mortgage on a high-rise flat in the UK
Many people find the lifestyle and centrality that a high-rise flat offers attractive.
Others find them a profitable investment. However, it is not as easy as you might think to get financing to purchase a high-rise flat.
Are you trying to get a mortgage for a high-rise flat?
We have many lenders who offer mortgages on high-rise properties. Whether you are looking for a commercial mortgage or residential mortgage on high-rise blocks, we can help.
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What is a high-rise flat?
No one definition of “high rise” has been agreed upon. Most lenders use this term to describe apartment buildings seven stories tall or higher.
Although high-rise flats have existed for many decades, large numbers were first built by local councils in the 1960s and 1970s to provide affordable housing for growing urban populations. High rises in high-growth areas across the country are now more expensive and newer.
Some mortgage lenders have become more open to lending on high-rise flats. Some cases can still be tricky, especially if you have ex-council properties or concrete construction.
Is it possible to get a mortgage in high-rise flat blocks?
Yes, in many cases. It might be more complicated than usual for high-rise mortgage applications.
High-rise apartments can be challenging to get mortgages because of the building’s height. This tends to make it harder for lenders to approve them.
This will be covered in greater detail later.
These are the two significant factors that will decide whether or not you can get a loan.
- Your financial circumstances
- The flat and the building
Both of these are covered below.
Your financial circumstances
Just as no two high rises will be the same, no two borrowers will be the same. These are the factors that lenders will consider when considering your mortgage request.
Your income sources
Lenders prefer applicants who earn 100% of their income from a substantial PAYE salary. Lenders will likely consider you ‘non-standard’ if you are looking for a self-employed mortgage or want to include commissions or bonuses in your mortgage application.
However, specialist lenders who will be more accommodating to individuals with unusual incomes are available. Our advisors can help you connect with very few lenders.
Your deposit
Your chances of getting a loan are more significant if you have a higher deposit and a lower LTV.
Credit history
People with perfect credit scores are eligible for the best rates from lenders. While bad credit may reduce your options for lenders, it is not necessarily a deal breaker.
Your age
Lenders may have an upper limit for who they loan. Others won’t mind if you prove that you can pay your payments in later life or retirement.
Your personal circumstances
A lender will stress test your expenditures and financial obligations to ensure that you can make the payments even if interest rates rise.
The lender will consider everything, from the other properties you own to how much you spend on childcare. It’s a good idea to reduce unnecessary expenses in your mortgage application.
The flat itself
There are no two flats the same. These are the factors lenders will consider when making an offer.
The building’s height (and the position of the flat within it)
Lenders will be turned off by anything over seven stories (sometimes even 10). If your apartment is not located on the 7th floor, some lenders will allow you to build buildings up to 7 levels. A majority of lenders require that the block have at least five levels.
How the building is constructed and what it is made of
Lenders are not allowed to finance certain types of construction, including concrete. As well as buildings without lifts, exterior walkways and “deck access”, as they are also known, can pose a problem.
The UK location of the flat
Lenders are more likely to finance purchases in high-growth metropolitan areas like London.
Exposure by the lender
Lenders will often not lend on multiple flats within the same building. This is usually around 20%. This is especially true for high-rise flats, where multiple apartments may be within the same structure.
Fewer lenders are available in high-rise buildings; they are more likely to have lent on similar flats. Even if all else is in order, it might be a reason they won’t make you an offer.
What are the remaining years on the lease? Are there any planned repairs to the building?
Leasing terms below 70 years may deter lenders. This is because the cost of extending the lease will increase as the clock ticks down.
Lenders also are wary of costly maintenance work that may be due in the future, which can result in high service fees.
What mortgage can I use to buy a block of flats and get a mortgage to buy them?
Contact residents if you want to purchase a block of flats and rent. You may be able to get a special buy-to-let (BTL) mortgage to buy the entire building. However, not all lenders offer this. We can help with this if you like the link.
A multi-unit freehold mortgage is a product you need. Lenders who offer them usually limit how many units a property can contain – typically, it is between five and ten.
A standard BTL mortgage could allow you to buy a single unit in a high-rise flat and rent it out to tenants.
Can I get a commercial loan for a block?
A multi-unit freehold mortgage is impossible if you own more than ten units in a block of flats. This is because of the restrictions placed by lenders.
However, there may be other options. A specialist commercial lender might offer you a mortgage for the entire block.
Commercial mortgages work differently from residential mortgages and are evaluated differently. You can find more information on this type of lending in our commercial mortgage and development finance sections.
How can I locate mortgage lenders for high-rise flats?
A specialist lender is required for high-rise flat mortgages, particularly if you want to invest in one. These properties are less likely to be considered by lenders, so finding the best rates may prove more challenging.
The good news is that we have mortgage lenders to introduce you to for high-rise flats.
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