Author: Elliott Culley - Director & Mortgage Adviser of Switch Mortgage Finance
Freehold Flat Mortgage
A freehold flat mortgage is specifically designed for flats which are held on a freehold basis and do not have a leasehold title. Although common in Scotland, in England & Wales most flats will have a lease and therefore freehold flats can be seen as non standard construction.
Freehold flats can cause headaches when it comes to who is responsible for the maintenance of the building.
Instead, your personal responsibility extends to the boundary of your flat, and neither you nor anyone else in your block will be obliged to deal with any maintenance issues that could arise. As a result, there are few lenders that currently offer mortgages on this type of property.
What is a Freehold Flat?
A freehold flat has no leasehold title, it isn’t tied to the building it’s situated in, it isn’t tied to any other property owners, it’s an entirely separate entity. Freehold flats are rarely seen in England and Wales, which means there isn’t a huge amount of mortgage lenders that consider it.
When compared to a leasehold flat, there is a big difference. In this scenario, someone will own the freehold of the entire building and the individual flats are leased to separate owners. The freeholder will request a service charge from the individual leaseholders, to fund the overall maintenance of the property and the grounds/communal spaces.
Not having to pay a service charge may sound appealing, however you may find getting a mortgage on a freehold flat far harder to come by.
Speak to an Expert!
Contact us today for expert advice and guidance on your unique mortgage and property needs. We will work with you on a one-on-one to basis to help you find the right solution for your needs.
With our experience you can rest assured that you are in good hands when it comes to securing the financing you need for your property.
Can You Get a Mortgage on a Freehold Flat?
Yes, freehold flat mortgages are possible, however there are only a handful of lenders that will consider this type of property. Mortgage lenders main concerns centre around:
- No legal obligation for the freeholder to maintain the building
- Concerns over disputes between freeholders
- Future freeholders may not agree to existing arrangements in place
- Concerns over the resaleability
- Concerns the property may not be maintained correctly
Mortgage lenders want to protect their interest as much as possible. With a freehold flat, it is more difficult for them to do this and as a result most lenders do not entertain this type of property. You may be able to find a lender, but this will be on a case-by-case basis and you’ll need to pass all other eligibility criteria
How Much Deposit Will I Need?
For a flat most lenders will want a 15% deposit. If you are looking at purchase a freehold flat on a buy to let mortgage, then you will need to have at least 25% deposit.
Can You Get a Freehold Flat Mortgage With Bad Credit?
If you have bad or adverse credit you will struggle to obtain a freehold flat mortgage. This is because there is only a handful of lenders that accept this type of property and most do not accept bad credit.
Other Types of Freehold Flat
Share of Freehold
A share of the freehold is where you purchase a flat with a leasehold title, but you either own the freehold for the building outright or share the freehold with the other leaseholders in the building. This is more common in houses that have been converted into flats.
A mortgage for this type of property is more widely available. However some lenders do still have certain requirements in there criteria that the property will have to meet.
For example, some lenders prefer it if the freehold is held in a management company, which you may need to become a director of. Some do not lend if you own the entire freehold yourself and in most cases are not happy to lend if you already own another property in the same building.
Coach House Flat
A coach house, or carriage house, is designed with the living area above a garage or a carport. In the past, they were used to store carriages and horses in stables on the ground floor – and had living quarters above.
A freehold flat mortgage would be needed for this type of property as well, however there are a few more lenders that can consider this type of property, so you may find it easier to source a mortgage for this type of property.
Mortgage on a Freehold Flat
A mortgage on a freehold flat in England and Wales does have its challenges, but there are lenders that accept freehold flats. There are 4 main mortgage lenders who offer mortgages on freehold flats. These lenders are competitively priced in the mortgage market and are mainstream lenders.
Why Use a Mortgage Broker?
A specialist broker can increase your chances of securing a freehold flat mortgage. Given that freehold flat mortgage lenders are few and far between, it makes sense to have an expert broker on your side to source them. We know which lenders will consider the application and can speed up the process. We find for freehold flats, having an expert to help you is invaluable.