If you are interested in getting a mortgage on high rise flats, you may have heard about different terms used for such flats. There are many misconceptions about the definition of High Rise Flats in the UK. But when we contact mortgage lenders, most of them will be agreed with the fact that any apartment building that is seven or more stories taller are considered as High Rise Flats. Most of these high rise apartments are built by councils in the 1960 and 70s as affordable ways to provide homes to the urban population. Nowadays, the more expensive high flats are being built in the United Kingdom. Now as our title suggest ‘Mortgage on High Rise Flats’ could be more complicated than normal loan applications. Lenders don’t find high building flats suitable for mortgages because of the risk involved and different than normal structure. As we have discussed, previously these flats are constructed with low costs and cheap material, that is also a reason, why mortgage lenders repel from such construction. However, there are some exceptions where banks can lend money against this type of property. In order to get a mortgage on high rise flats, it’s important to understand what kind of risks they pose. The main problem faced by borrowers who want to take out loans on high rise properties is their higher cost compared to other types of homes. This means that if you borrow £100k at a 5% interest rate, then your monthly repayments would be around £500 per month. If you were to buy an average house worth £200k, then you would pay only £50 per month towards repayment. So even though the amount borrowed is the same, but the payments made are much lower. Another major issue that arises due to the nature of high rise buildings is the lack of space. These buildings tend to be very tall so therefore, there isn’t enough room inside the flat to store all the belongings needed. Therefore, people often need to rent storage units outside the building.
Factors responsible for getting a mortgage on high rise flats
There are various factors involved in getting a mortgage to rise flat in the UK. Some of them are mentioned below:
Financial Circumstances: Every buyer has different financial circumstances depending on their profession and mortgage lenders access the applications on the basis of nature of income and future affordability for mortgage repayments.
Income Sources: Most of the main street lenders are interested in individuals who make 100% of their living from a sizeable PAYE salary. It is different for self-employed individuals who are hoping to include commission or bonuses income for the loan application.
Loan Amount: The maximum limit depends upon the lender’s policy. Generally speaking, the minimum loan amounts range between £25K -£75K while the maximum limits vary between £1 million – £2million for high rise flats.
Location: As already stated earlier, location plays a vital role in deciding whether a borrower gets approved or not. Banks usually prefer lending money to those applicants who live close to workplace.
Risk Assessment: Banks assess each individual case based on its own criteria. For example, one bank might consider the applicant’s credit history whereas another might look into his/her employment status. A good credit score is essential for obtaining a mortgage on high rise flatted.
Deposit Amount: As per all other mortgages while buying a high rise flat, the greater the deposit, the more the chances of the application approval.
Credit History: Bad credit mortgages are possible but only from some street lenders. Credit history always plays an important role in the approval of the mortgage application, even for a high rise flat.
Personal Circumstances: Lenders can also look forward to your expenditure and existing financial obligations to determine that if you could make the mortgage repayments or not.
Flat(Height & Location): Flats height and location also matter for banks and building societies while accessing the mortgage application. If your high rise flat is above 7 or over storeys, it will be a red flag for many lenders. Even having a lift may also affect the mortgage application for high rise flats.
Buy to Let on High Rise Flats
The term ‘buy-to-let’ refers to renting out a residential property to generate additional cash flow. Many investors choose to invest in buy-to-lets rather than traditional investment options like stocks and shares. Buy-to-let investments offer several advantages including tax benefits, capital growth potential and flexibility. Investors can use the rental income generated through the buy-to-let property to reduce personal taxation liabilities. They can also increase their wealth without incurring significant debt.
Can I get a buy to let mortgage for a block of flats?
Yes, you can apply for a buy to let mortgage for a block of flats. You should note however that there are certain restrictions that apply when applying for this type of mortgage. These include:
• The total value of the properties must be less than £500,000.
• The sum of the purchase prices cannot exceed £250,000.
Can I get a buy to let mortgage for High-Rise Block Flats?
Yes, you can apply for a buy to let mortgage for a high rise block of flats. However, there are certain restrictions that apply when applying for this type of mortgage. • The total value of the properties must be less than £750,000.
• The sum of the purchase prices cannot exceed £350,000.
• The total number of units must be no more than 12.
• The average gross annual rents must be no more than £20,000
Why do buyers struggle to get a mortgage on high-rise apartment blocks?
There are two main reasons why people struggle to get a mortgage on high-rise apartments. First, they have a limited credit history because most of them have never owned a house before. Second, they often don’t have enough equity in their current home to put down as a deposit. This means that they need to borrow money from friends and family to fund their purchases.
How much does a buy to let mortgage cost?
A buy to let mortgage costs around 1% higher than a standard mortgage