Multi-Unit Freehold Block (MUFB) Mortgage

What are the lending criteria for a multi-unit freehold block?

The majority of lenders prefer you to have some landlord experience, but some do offer products to first-time landlords or first-time buyers.

Some lenders will only lend on properties with a maximum of six units, while others have no limit. Those are the main starting points for an MUFB.

What are the usual rates for a multi-unit freehold block mortgage?

The mortgage rates are relatively similar to those for a standard Buy to Let mortgage – for a property just let out to one tenant or family.

It does depend on the specific circumstances. If you’re a first-time landlord, or the property has more than six units, you will probably find that the rates are higher.

What are the benefits of taking out a multi-unit freehold block mortgage?

The main benefit to landlords is the rental yield for that property. It’s usually much higher than if you were to let the whole property to one family on a traditional tenancy agreement. That’s the main attraction.

What are the complexities of taking out a multi-unit freehold block mortgage?

The mortgage process will be relatively similar for a multi-unit freehold block and a traditional Buy to Let property. Complexity can arise if the property has shared facilities – as not many lenders will look at that.

The same goes if there are more than six units in the block. Also, not many lenders offer 80% Loan to Value, so you may find the process a bit harder with a smaller deposit.

Mortgage lenders will also charge a valuation fee for this type of property, so there are higher costs involved when purchasing, and also when remortgaging in the future.

What are the repayment options on a multi-unit freehold block mortgage?

You can have an MUFB mortgage on either repayment or interest only. It just depends on your circumstances and your objectives.

Is it worth investing in a multi-unit freehold property?

The rental yields are usually higher for multi-unit properties, but these do require more time and management from the landlord. You have to weigh that up. The product fees can also be higher, and there are potentially other costs such as valuation etc.

Ultimately, it’s your decision. You need to look at your current circumstances, the scenario in front of you and how you’ll manage this. That will determine if the investment is worthwhile for you.

When we speak to landlords, they do seem to be targeting this type of property now. There are clearly some good investment opportunities here.

How can a mortgage broker help?

The preparation of this is key. If you’re seeing a property, it’s worth speaking to an advisor to help you find the right lender, especially if you’re looking at something unique.

If you’re a first-time landlord or first-time buyer, there aren’t many lenders available – just a handful. You probably will need some support with that so it’s definitely worth getting in touch. Getting an Agreement in Principle in place will always help you in finding the right property.