Apartment mortgages

Find out how to get a mortgage on an apartment, what the application process involves and what criteria you need to meet.

How will you be using the apartment?

Home Property Types Apartment Mortgages
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Jon Nixon

Reviewer: Jon Nixon

Director of Distribution

Updated: March 18, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

March 18, 2024

If you’re looking to get a mortgage on an apartment – more commonly known as a ‘flat’ in the UK – there are things you need to be aware of due to lenders having different approaches to different apartment types, of which there are quite a few.

Generally, getting support from a mortgage broker if you’re looking to buy one should make your application process relatively straightforward, however here is a guide that tells you more about getting a mortgage on an apartment.

Can you get a mortgage on an apartment?

Yes, of course you can. Financing for this type of property is fairly common, and while it is certainly achievable, there are more complexities involved than getting a mortgage on a house, simply because there are so many variations and types of apartments.

Essentially though, applying for a mortgage on a flat will be a similar process as for a house, whether that be a residential mortgage or a buy-to-let, so work with your broker to ascertain your position on affordability, eligibility factors and preferential mortgage types before they search for suitable potential lenders for you.

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How is it different from a standard property?

Because an apartment is a living quarter within a larger property with separately-owned homes inside, rather than a self-contained building like a house is, lenders will need to look more closely into this kind of non-standard building before being satisfied that it’s fit for mortgaging.

Implications for different types of apartment

The many different variations of apartments will be assessed on their unique characteristics and then offers will be based upon them. For example, many lenders will not be willing to stretch to a higher loan-to-value ratio on a loan for a new-build apartment, as opposed to a standard flat (lenders view new-builds as being priced at a premium, with value instantly dropping once bought, therefore deem them riskier).

Other examples which lenders are open to mortgaging but might be more meticulous about, are:

  • Studio flats: These one-room living areas are usually small and therefore priced much lower than more standard apartments. Very small studios may not reach the minimum required square-footage that some lenders insist upon.
  • Apartments above/within commercial buildings: Apartments that are located above shops, pubs and food outlets might come with their own complications and security drawbacks, therefore some lenders will insist on getting a valuers report on the property before agreeing to lend on it. Some banks might even stipulate that there is one clear floor between the commercial area and the property.
  • Ex-council flats: Lenders will need to be reassured of the ex-local authority home’s resale value. They could also have rules about balconies and storey heights, private ownership precedent, communal gardens, or have clear rules on minimum property value or floor area maximum.
  • Basement apartments: These are not overly contentious for lenders, but most still prefer a report on the property before they’ll commit.
  • Number of storeys: The criteria for this fluctuates wildly from lender to lender, from some asking for no more than five if built before 2000; a lower loan-to-value for more than a certain number of storeys; lifts required if more than three or four storeys; seven storeys accepted with conditions; maximum 20 floors; maximum three floors; to no maximum at all.

Leasehold and freehold

Some apartments are leasehold and some are freehold, and which one your property falls under will have a bearing on your mortgage success. Lenders prefer leasehold flats because it means the land it sits on has one single owner (and you are ‘leasing’ that land), which makes the situation far less complicated when it comes to who is responsible for it.

There aren’t an abundance of lenders out there who will approve a residential mortgage on a freehold apartment, but there’s still a good handful who will. Bear in mind that the remaining term length of the leasehold will also carry weight in the mortgage application, with fewer years left on it meaning potentially fewer mortgage options than if there were plenty. More than 100 years left is preferable.

How a broker can help secure the lending you need on an apartment

Experienced mortgage advisors can make a huge difference to the outcome of your application, especially when it comes with slight complexities. While trying to secure a loan on an apartment might sound like it should be simple because they’re so common in our property market, the reality can be quite different because of the huge gaps in building types.

Despite these hurdles, a good broker will know which lenders are flexible and amendable when it comes to apartment lending, and how to approach their application processes. An impartial broker, like the ones we work with, will also talk you through those practicalities of your chosen property, the feasibility, and will support you through strengthening your application. You can find out more about apartment mortgage brokers by calling us on 0808 189 2301 or making an enquiry online.

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Can you get a mortgage on an apartment with cladding?

Since the fire disaster at Grenfell Tower in London in 2017, apartments housed in tower blocks that have cladding are far more difficult to get a mortgage on. It’s not impossible though. Banks are split about evenly down the middle on the subject, with some lenders giving conditions, and others refusing to consider applications altogether.

For those open to applications, you’ll need to obtain some quality assurances, such as EWS1 forms, or an A3 or B2 rating, a positive valuers report, or meeting the Ministry of Housing, Communities and Local Government guidelines. Sometimes storey heights come into the criteria, and the date it was built. For example, Barclays determines that any property built after January 1, 2020 is assumed to have cladding that meets current fire safety regulations, therefore not an issue.

What types of mortgages are available for apartments?

Just like with houses, there are a number of different types open to you. There is the standard residential repayment mortgage, which involves paying off the cost of the flat plus interest over a specified term length, or even the interest-only residential mortgage, which involves only paying the interest accrued every month until the end of the term. Lenders tend to offer lower loan-to-value mortgages on flats than they do houses.

Buy-to-let and commercial buy-to-let mortgages are also available on flats. There is the usual eligibility criteria for these, and you might have to prove that you’ll receive at least a 125-130% yield on your mortgage payments for a buy-to-let, and interest rates can be higher for commercial.

How much can you borrow?

The affordability rules around apartment borrowing are much the same as a regular house mortgage. Banks will check your income and expenditure to determine whether to approve the loan amount.

Input your own annual salary into our online mortgage calculator to get an estimate of how much you might be able to borrow to purchase an apartment.

Mortgage Affordability Calculator

Use this calculator to determine how much you could potentially borrow for a mortgage, based on the typical salary multiples used by most UK lenders.

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You could borrow up to 

Most lenders would consider letting you borrow

This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.

Some lenders would consider letting you borrow

This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.

A minority of lenders would consider letting you borrow

This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.

Get Started with an expert broker to find out exactly how much you could borrow.

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Eligibility criteria

The range of loan-to-value mortgages for an apartment are much the same as with houses, however there are certainly fewer options. So some lenders might offer you a 95% loan-to-value ratio, meaning you only need a 5% deposit, while others might offer as little as 60% or 70%, leaving you needing a 30-40% down payment.

For clarity, there are three mortgage lenders at the bottom of the ladder offering 60% loan-to-value ratios, and about 20 at the top who offer 95% – but don’t forget, each of these have their own restrictions and criteria within them, as we’ve already outlined.

Can you get a mortgage loan for an apartment building?

Yes, this is an option if you’re looking to buy a whole building as a commercial freehold owner, for example if you’re looking to invest in property as a landlord. This is called a multi-unit freehold block, and interest rates are often higher, with loan-to-value usually slightly lower than average, but still often at a solid 75%.

Speak to a broker experienced in mortgages for apartments

Our specialist advisors have a wealth of experience in securing apartment mortgages for all different types of clients, buildings, loans and eligibility brackets. They understand the hurdles that must be overcome, and have seen every scenario before. This means they will understand your circumstances and be able to direct you accordingly.

We can match you with a five-star rated broker today to start the conversation around what kind of support you need and what type of outcome you’re looking for. With access to the entire market and contacts in the right places, the right broker will work hard to ensure your application is a success.

Call us on 0808 189 2301 or make an online enquiry for an initial free consultation.

Maximise your chance of approval with a broker who specialises in getting a mortgage on an apartment

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FAQs

Yes, it is possible as long as all of the criteria and conditions are met. Usually one-bed apartments are larger than studios, which come with their own rules, such as minimum sizes, but are still possible to get a mortgage on, so one bedroom flats should be more eligible.

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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 Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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