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The Best Mortgage Products for Apartments

An independent guide to finding an excellent mortgage product for an apartment in a freehold or mixed-use property.

The Best Mortgage Options When Buying An Apartment

Flats or apartments are a very common type of home and are most popular in cities and towns. From luxurious penthouses to studio flats and starter homes, you may have found it challenging to mortgage a flat due to your chosen bank's lending policies.

Here we'll summarise the different mortgage products available, and what sort of considerations a lender will have when assessing an application.

For expert help from an independent broker, contact Revolution Brokers on 0330 304 3040, or email the team at [email protected].

Do I Need a Different Type of Mortgage for a Flat?

Not usually - any property that is a part of a larger building is generally considered an apartment.

The terms on the market for flats are not dissimilar to those for standalone houses, although it's important to clarify what sort of apartment you wish to buy, as this will dictate the ease with which you can secure a mortgage.

Some examples include:

  • Studio apartment mortgages - properties where the living space and sleeping spaces are combined. Studios can be one of the most problematic types of flat to mortgage, even though they are affordable and often an ideal starter home. That is because many lenders have a minimum square footage requirement that a studio is more likely to fall outside of.
  • One-bed apartment mortgages - these homes are usually bigger than studios and have a separate bedroom. One-bed flats are usually still affordable, although slightly more expensive than studio apartments.
  • Mortgages for multi-bedroom apartments. That could include a maisonette or duplex with more than one floor, flats with mezzanine levels, or an apartment with two or more bedrooms.
  • Ex-local authority flats - those previously owned by the council or housing authority. Many ex-council flats are larger than those built for private owners and can range from studios to large family apartments. In many cases, ex-council flats are built within older buildings, and may therefore be considered 'non-standard'.
  • Mortgages for high-rise apartment blocks. This includes anything above seven storeys, from ex-council residential blocks to contemporary developments. High rises are also a non-standard property type, so it is essential to choose the right lender who will approve your application.
  • Multi-lets or apartment buildings. Mortgages of this type can be more specialist and are usually designed for apartment buildings purchased by investors as a rental asset.
  • Serviced apartments are a different property for the purposes of a mortgage, and are usually used as an alternative to Airbnbs or other short-term rental options. Mortgages for serviced flats are often available through niche lenders, who lend against other properties such as holiday lets.
  • Mortgages for London apartments - while property prices in the capital are notoriously high, there are often more flexible mortgage terms available. For example, if you qualify for a support scheme as a first-time buyer, the limits are usually higher for London properties.

Are There Mortgages for Buy to Let Apartments?

There certainly are; you can buy an apartment as a rental investment in the same way as any other residential property.

Lenders will need to assess your affordability and ensure that the anticipated rental income will comfortably cover the interest-only mortgage repayments.

Is it Easier to Mortgage a Freehold or a Leasehold Flat?

Leasehold is a more common type of purchase since a flat is usually owned as separate property. The neighbouring apartment owns their own space with the common areas maintained by the freehold owner in return for maintenance fees.

Having one freeholder for an apartment block is less risky from a lender perspective since it avoids splitting the liability or responsibility for upkeep.

Mortgage rates will depend on the lease period - a leasehold with over 90 years to run is an easier prospect than one with 60 years or less.

Are There Commercial Mortgages to Invest in a Flat?

Another option to invest in a rental property as a business is to consider a commercial mortgage. This type of loan usually requires a decent deposit, and you will need to show that there is plenty of rental demand to make the investment viable.

In some cases, you might need to provide guarantees or other security.

Commercial mortgages can be used to purchase complete apartment blocks, although a mortgage of this size would usually require a specialist lender.

Interest rates are usually higher than for a residential apartment mortgage and will be tailored to your application rather than fitting in with a standard rates table.

Can I Use a Commercial Mortgage Calculator to See What I Can Borrow on an Apartment Mortgage?

You can use mortgage calculators to get a rough idea about how much you could borrow, and how much the repayments would be. However, such calculators are generic and only meant to be indicative.

If you are interested in comparing the most competitive mortgage rates on commercial lending for an apartment purchase, give the business finance broker team a call.

Professional Support with UK Apartment Mortgages

For more information about the best mortgage products for apartment, rates and terms, and lenders on the market for any of these types of apartment, contact the team on 0330 304 3040, or email us at [email protected].

As an independent, whole-of-market broker, we'll work with you to find the ideal lender who can offer the mortgage you need, and negotiate the terms on your behalf.

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