Updated: February 24, 2022

Freehold Flat Mortgages

Need a freehold flat mortgage? It can be done! Find out who the lenders are and exactly what you need to do next in our in-depth guide.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: February 24, 2022

If you’re thinking of buying a flat, the most important thing to consider is whether it’s freehold or leasehold. Of the two, freehold flats are more scarce and getting a mortgage for one even more so. But, that doesn’t mean it’s impossible – far from it!

This guide will tell you everything you need to know about getting a mortgage on a freehold flat, what you need to be aware of, and how a specialist broker will be able to help make the whole process much more straightforward.

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What is a freehold flat?

A freehold flat has no leasehold title, and isn’t tied in any way to the building it’s situated in or any other property owners – it’s an entirely separate entity. This means there’s no external body responsible for the property or the building as a whole, and as such, no need to pay ground rent or service charges.

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.

This is in stark contrast to leasehold flats, which are much more widely available (except in Scotland, where freeholds are more common). In this scenario, someone owns the freehold of the entire building and the individual flats are leased to separate owners, who will usually pay extra to ensure maintenance of the building itself and any communal spaces.

Freehold flats may initially sound appealing – particularly as there are no service charges to pay – but it could actually make the process of homeownership more difficult, especially when it comes to securing a mortgage.

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Can you get a freehold flat mortgage?

Technically yes, but it’s not straightforward. Freehold flat mortgages are almost impossible to come by, with lenders often not seeing this kind of property as good security. There are a few reasons for this:

  • There’s no legal obligation for any flat owners to maintain the structure of the building.
  • You’re reliant on your neighbours to share the cost of any repair or remediation works that may be necessary, but they’re under no obligation to pay.
  • Individual flat owners aren’t required to keep their property in good condition.
  • Agreements can be made between occupants in the building, but there’s no guarantee that any future freeholder will enter into it.
  • Disputes about who’s responsible for what are a very real possibility – if your ceiling is someone else’s floor and there’s a leak, who’s responsible for fixing it?

Because there’s no clear division of responsibility in a freehold flat building, most lenders are understandably wary – it reduces the value of the property, the building could easily fall into disrepair and the flat is less saleable. Ultimately, if issues arise, the lender risks losing out.

You may be able to find a mainstream lender, but this will be on a case-by-case basis and you’ll need to pass all other eligibility criteria with ease, which means it’d be worth speaking to a specialist broker first who can approach the right providers on your behalf.

How a broker can help

A specialist broker can help you secure a freehold flat mortgage in two key ways:

  • They can help you identify the lenders and best rates available. 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. They’ll know exactly who to approach to save you time and reduce the possibility of a straight-up rejection, and will be able to negotiate on your behalf to secure the best rates.
  • They can help you avoid any pitfalls during the application process. The complexity of a freehold flat arrangement means having someone who’s experienced in this kind of mortgage application can be invaluable, as they’ll know exactly what you need to do – and any potential hoops you need to jump through – to boost your chances of success.

If you get in touch we can arrange for an advisor we work with, who has experience of arranging mortgages for this type of property, to contact you directly.

Who will lend on freehold flats?

Very few mainstream lenders will offer mortgages on a freehold flat. Even if they do, they’ll often have stringent criteria, such as:

  • Some lenders will only offer this kind of mortgage where the security (or freehold) comprises the whole building.
  • Acceptable loan-to-value (LTV) ratios are often lower, particularly for new builds, with some lenders offering maximum LTVs of 75% or 85%.

HSBC, Nationwide and NatWest are the only mainstream lenders who will currently consider lending on true freehold flats, but this will always depend on your individual circumstances and is subject to strict criteria. The remaining few lenders who operate in this space are smaller providers, and in all cases, it’s advisable to speak to a specialist broker beforehand.

Eligibility requirements

Eligibility criteria can be more strict for this kind of mortgage. Here are a few things you’ll need to bear in mind.

Deposit

You’ll typically be expected to have a larger deposit, primarily due to the extra risk that a lender will be taking on. Anything higher than 85% LTV – which means you’ll need a deposit of at least 15% – will be rare, though not necessarily impossible; speak to a broker to see who would be willing to lend at this level.

Affordability

In normal circumstances, most lenders will be able to offer a mortgage at up to 4.5 times your salary, but this may not be the case when it comes to freehold flats. You’ll need to speak with an individual lender – or ideally, a broker who knows all suitable lenders’ criteria – to find out how their affordability calculations may differ.

Credit checks

A credit check will comprise a key part of your affordability assessment, and with such an unusual property you’ll likely need a high credit rating to be considered.

You can download your credit reports straight away to see how your scores look at the moment. If there’s any information on there which is incorrect or outdated you can take steps to remove this now so it won’t affect your application.

Property criteria

The flat itself will also need to meet set criteria in order to be deemed mortgageable, with some lenders stating that they’ll only be able to lend subject to satisfactory recommendations from a valuer and solicitor to ensure marketability.

Other types of freehold flat

True freehold flats are very different to flats that share a freehold. Known as ‘share of freehold’ flats, owners share both the lease and the freehold of the entire building in which they’re situated, which can make the flat itself more valuable as the owner has an interest in the whole building.

There can also be arrangements where a house has been converted into flats, with the owner of the house leasing the other flats out but retaining a separate part of the building for themselves (they may have the upper floor but the lower floors are on a long lease, for example).

As the freeholder of the building, their own dwelling has no lease and as such can sometimes be confused as a freehold flat, but on closer inspection will normally be mortgageable.

Get matched with a specialist freehold mortgage broker

Freehold flat mortgages are anything but standard, and such a complex purchase means you’ll need an expert on your side to streamline the process. Our unique broker matching service can help you find that expert.

We’ll put you in touch with an advisor who specialises in freehold flat mortgages, giving you the best possible chance of securing the finance you need thanks to their network of lender contacts and in-depth knowledge of the sector.

It’s free and there’s no obligation, so call 0808 189 0463 today or make an enquiry to get started.

FAQs

Can I get a freehold flat mortgage with bad credit?

Potentially, though bear in mind that these mortgages will already be difficult to come by even with a stellar credit rating, so having a poor credit score puts you at a greater disadvantage. You should speak to a broker who knows the lenders that may be willing to accommodate your circumstances.

Can I get a freehold flat mortgage if I’m a first-time buyer?

Yes, though remember that you’ll likely need a larger deposit than typical first-time buyer mortgages can accommodate, particularly if you’re seeking a new build property.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different Property Types. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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