Getting a mortgage on maisonette
When you are house-hunting, you will encounter many different types of homes. Some will be detached, semi-detached, or terraced houses. Others will be flats. And still others will be maisonettes. On top of all that, some properties will be freehold and others leasehold.
Although you will be entirely familiar with houses and flats, maisonettes might remain something of an unknown quantity, so let’s take a close look at them – and, in particular, any issues surrounding a mortgage on a maisonette, freehold or leasehold.
Post Topics – Mortgage on maisonette
What is a maisonette?
“Maisonette” is a French word of course with a literal meaning of “little house”. Whereas a house – whatever its size and shape – is typically an independent property, a maisonette is in a building comprising similar dwellings, although it usually has its own separate door onto the outside of the building.
Having your own front door onto the outside world increase your sense of privacy and security, of course.
It is that separate door onto the outside of the building that also distinguishes most maisonettes from flats – the latter having a front door that opens onto a corridor, landing, or foyer shared in common with other flats in the same building.
Nevertheless, the fact that a maisonette shares the same building as other dwellings – if nothing else, supporting walls and a common roof mean that structural features are shared – leaves maisonette mortgages harder to get than regular advances.
Are maisonettes freehold or leasehold?
A further complication – and one that makes getting a mortgage on freehold and leasehold maisonettes more challenging – is that they can be either freehold or leasehold.
In a posting updated on the 4th of May 2022, the Money Saving Expert explains that if you own the freehold of a property, you also own – in perpetuity or until you sell it – the land on which it stands. Leasehold ownership entails the ownership of the dwelling itself but not the land on which it is built – that continues to be owned by the freeholder who is effectively the leaseholder’s landlord.
Since the majority of maisonettes in the UK are leasehold properties, you are likely to have a landlord to whom you pay both a ground rent and an annual maintenance charge. This is typically for the provision of common services including the maintenance of the exterior of the property and its building insurance.
Ground rents – and especially the landlord’s ability to increase them – have attracted considerable controversy lately. As a result, the Leasehold Reform (Ground Rent) Act 2022 , abolishes all ground rents on new residential leasehold properties and reduces to a token amount the ground rent on an extended portion of an existing lease.
Because a maisonette shares structural features – and risks – with other dwellings in the same building, a freehold maisonette mortgage can be more difficult to secure. Despite the relaxation of issues around escalating ground rents, leasehold maisonette mortgages may be more difficult still.
Can I get a mortgage on a maisonette?
Nevertheless, there are lenders who are happy to entertain applications for both residents and buy to let (landlord) mortgages on both freehold and leasehold maisonettes – provided, of course, that you meet the lender’s borrowing criteria. Your choice of lenders may be more limited and – as ever when this is the case – you might want to consult an independent mortgage broker with experience in these types of mortgages to help you identify the most likely lenders.
What is a freehold mortgage on a maisonette?
As we have seen, when you buy a freehold property, you also own the land on which it is built – including any land surrounding it. As the freeholder, you are then also responsible for any other dwellings which share that plot of land and for the costs of maintaining the exterior of the whole property.
Your responsibilities towards other dwellings related to your freehold come with a financial cost – a cost that lenders will take into account when calculating the affordability of any mortgage for which you have applied.
A variation on this freehold theme is when the freehold is shared with others in the same building – typically owners of their respective leaseholds and a percentage share in the freehold of the entire building. While this may help to share the costs of owning the freehold, it is not without the risks associated with sharing responsibilities for the maintenance of the building with others.
Because of those risks, some lenders will not entertain a freehold mortgage for the purchase of a maisonette with a share of the freehold.
Can I get a leasehold maisonette mortgage?
As we have also seen, the more common form of tenure for a maisonette is leasehold ownership – and, for its purchase, you will need a leasehold maisonette mortgage.
The biggest concern of any leasehold maisonette mortgage lender will be the length of the remaining leasehold. This is the period set by the freeholder, to whom ownership of the property reverts at the end of the lease. Naturally, the shorter the lease, the less valuable is your home to any prospective new owner and typically the more difficult it will be to secure a mortgage.
Most lenders will be looking for a remaining lease of at least 70 years or for a lease that extends at least 40 years beyond the full term of the mortgage. This is so that the property’s value has not been unduly eroded by the shortening of the lease.
A maisonette in the UK is typically part of a building shared with other dwellings – flats or other maisonettes – and ownership can be freehold or leasehold, with the latter the more common form of tenure.
While it is certainly possible to get a mortgage on a maisonette freehold or leasehold, you might find acceptance of your application more challenging than for other types of dwelling. Because of those difficulties, you might want to consult professional brokers – such as us at NeedingAdvice.co.uk – with experience in identifying likely lenders and assistance in securing the mortgage you need.
FAQs- a mortgage on maisonette
What do you need to know when buying a maisonette property?
People contact us regularly, asking for mortgages on maisonette properties. We are usually asked questions like “can you a get mortgage on maisonette properties?” and “what are the pros and cons of buying a maisonette”? Keeping this in mind we have created this guide to answer such queries. There are a lot of things that you have to know before buying a maisonette property. Here we have covered all the major points about the maisonette property.
What is Maisonette Property?
The maisonette is a type of flat/house where there is one main living space but there are two or more bedrooms. It is very similar to an apartment. The main difference between them is that a maisonette does not have a separate kitchen and bathroom.
How much money do I need to buy a Maisonette?
Maisonettes are expensive compared to apartments. You should always check out what kind of loan you can avail of from banks. If you have a good credit score then you can easily avail a loan up to 80% of the value of your house. But there are also other factors than a credit score, it is always better to contact an expert mortgage broker today before starting your loan application for Maisonette.
Can I Buy a Maisonette without paying Stamp Duty?
Yes, if you are purchasing a maisonette property which is under £300,000 then you don’t have to pay stamp duty. But if you are purchasing a property over £300,000 then yes you have to pay stamp duty on the purchase price of the property.
How does a maisonette mortgage differ from a standard mortgage?
Maisonettes are generally considered as part of a larger building, and therefore, they are included in the overall value when calculating your mortgage offer. However, if you buy a maisonette without any other properties, then you may be required to pay more than usual.
What factors impact getting a mortgage on a maisonette?
There are many factors that will affect whether you are able to get a mortgage on a maisonette. These include:
• Your income
• Your credit history
• What sort of mortgage you would prefer (e.g., interest only)
• Whether you already own another property
• How long do you plan to stay on the property
• Any existing debts
• Equity in your current home
• Location of the property
If you are planning to buy a maisonette, it is important to understand how these factors will influence your ability to secure a mortgage.
Can I get a mortgage on a maisonette with a bad credit history?
Yes, you can get a mortgage on a maisonette with bad credit issues but you may need to contact an expert broker for your mortgage application process.
Is it possible to get a mortgage on a maisonette without having a guarantor?
You can apply for a mortgage on maisonettes without a guarantor but it is highly recommended that you take someone along who is willing to sign off the loan documents. This person could be a friend or family member. You can also read about joint mortgage applications in our other article.
Are there any benefits to buying a maisonette?
Yes, there are various benefits of purchasing a maisonette property in the UK. Some of them are mentioned below.
- You can save money by avoiding the cost of renting a spare room.
- You can enjoy the convenience of having all your belongings within walking distance.
- A maisonette gives you the opportunity to live close to work.
- There is usually no garden maintenance involved.
Can I get a residential mortgage for the maisonette property type?
Yes, you can get a residential mortgage for a maisonette property type. The main difference between this type of property and a flat is that a maisonette has one fewer bedroom. However, if you are a first-time buyer, you may need to contact an expert advisor.
Can I get a buy-to-let mortgage for a maisonette house property?
Yes, you can get Buy-To-Let(BTL) Mortgages for such properties. We have written a set of advice to maisonette buyers that could help you get buyer confidence and purchase the property. Or else you can also ask us for specific financial advice for such different types of properties.
What are the lender criteria for maisonette mortgages?
There are eligibility criteria for maisonette mortgages such as affordability assessment, credit rating, occupation etc. If you meet the criteria, then you should be able to get a mortgage for a maisonette. Even if you have adverse credit, you can apply for such mortgages. There is some bad credit lender, who will approve your application.
What is a freehold maisonette?
Freehold Maisonette means that the owner owns the land and building together. In contrast, leasehold maisonette means that the ownership of the land is held by the landlord while the ownership of the building is held by the tenant. There is also a multi-unit freehold mortgage that you can read in our other article.
Can I get a freehold maisonette mortgage with credit issues?
Yes, you can apply for a freehold maisonette mortgage with adverse credit reports, but you may need to contact a mortgage broker.
Please note that this document has been prepared solely for information purposes. It is not intended to provide legal advice. The law changes frequently and varies between countries. Before acting upon any of the information provided herein, you should seek independent professional advice.