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Apartment mortgages

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 25th June 2019 *

Apartments (a term we’ll use interchangeably with the word ‘flats’) have been a popular choice for centuries - particularly in urban areas, and for those with less money to spend on a property.

In this piece, you’ll learn about some of the different kinds of flat, and the financing around them.

If you’re trying to mortgage an apartment, the expert advisors we work with can help. Get in touch and we’ll see what we can do.

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Are apartment mortgages different to other types of residential mortgage?

The term ‘flat’ or ‘apartment’ is usually used to describe a situation in which your living space forms part of a building (but not the whole building). This is opposed to a house, in which your living space encompasses the entire structure.

How do I get the best apartment mortgage rates?

Residential apartment mortgage rates are typically similar to those offered on residential houses. However, In the context of property finance, the term ‘apartment’ can describe a variety of different arrangements. And some are harder to finance than others.

In any case, the best way to get the most favourable rates on an apartment mortgage is to apply through a whole-of-market broker. That way, you will have access to all of the best deals you qualify for.

Make an enquiry here and we’ll connect you to one.

What are the different kinds of apartment mortgages are there?

An ‘apartment mortgage’ can refer to a property loan for a variety of different types of building, including...

Mortgages for studio apartments

These are apartments in which the bedroom and main living space are combined. Usually the smallest option - they’re typically the most affordable. But this small size can sometimes be a hindrance - as studios often fall below the minimum square footage that lenders will lend on.

If you’re after a mortgage for a studio apartment, make an enquiry and the advisors we work with will introduce you to the right lender for your needs and circumstances.

Mortgages for 1 bedroom apartments

This is a flat in which the bedroom is located separately from the living area.

These are typically larger than studio flats, which usually makes them more expensive, but also more eligible for financing. If you’re looking for a mortgage for a 1 bedroom apartment make an enquiry and the expert brokers we work with will connect you to the right lender.

Multi-bedroom apartments

Similar in configuration to a one bedroom apartment, but with multiple bedrooms. This can sometimes encompass multiple floors in what is known as a ‘maisonette’ or ‘duplex’.

Ex-council apartments

Sometimes referred to as ‘ex local-authority’ - these are properties that were formally owned by local councils, but are now available on the private market. They are typically larger than flats that were built on the private market - being built to ‘Parker Morris’ standards.

Ex-council can encompass everything from a small studio to a multi-bedroom apartment.

These kinds of flats are often located in older buildings - which can result in difficulty due to ‘non-standard’ construction.

High rise apartments

These are apartments located in buildings that are typically taller than 7 stories. Many ex-council apartments fall into this category, as do lots of high-end new builds.

The promise of amazing views is offset by the fact that a lot of lenders are put off by anything 7 stories or higher - especially when certain building materials (such as concrete) come into the picture.

Trying to finance a property of unusual construction? Get in touch. The advisors we work with are experts at finding apartment mortgage loans - whatever the property and whatever your circumstances.

Apartment buildings

You can also mortgage an apartment building (sometimes referred to as a ‘multi-let’, due to the fact that it compromises multiple flats). This kind of financing is particularly specialised, and, depending on the deal, can be done through a BTL or commercial mortgage.

Serviced apartment mortgages

Due to recent changes in tax law and the rise of short-term letting through services like Airbnb, many landlords have moved to serviced apartments (which are also known as ‘serviced accommodation’).

Serviced apartments are a specialised area - and are financed more like holiday lets. In fact, you’re not legally allowed to use BTL financing for a serviced apartment mortgage. As such, there’s a smaller number of lenders in this space, which is relatively niche.

If you’re looking for a mortgage on a serviced apartment in the UK, make an enquiry and the advisors we work with will introduce you to the right lender.

London apartment mortgages

Apartments are typically more expensive in the UK capital, but that doesn’t mean finding a favourable deal is impossible. Check out our guide to London mortgages for more information or make an enquiry here to speak to a specialist broker.

Can I get an apartment mortgage for buy to let?

Yes, it may be possible to take out a buy to let mortgage for an apartment you’re planning on renting out.

Assuming that the building itself is mortgageable, a buy to let provider may be willing to lend to you, as long as you pass their eligibility checks

This will also require you to show evidence that your rental payments will cover at least 125-130% of your mortgage repayments. Minimum income requirements might also apply.

Freehold or leasehold

One of the biggest factors in obtaining apartment mortgage loans is whether the apartment is a freehold or a leasehold. Most – but not all – flats are leasehold and this is how lenders like them. The reason for this is because the structure of the block is shared with others i.e. one person’s floor is another person’s ceiling. Lenders much prefer one freeholder for the whole block as if not it could lead to arguments over liability. The number of lenders who will lend on a freehold flat is very few.

The length of time remaining on the leasehold is also of vital importance and should be one of the first things you establish if you want to make an offer on a flat. A lease with 90 years remaining will give you a lot more options than one with only 60 remaining.

Can I use a commercial mortgage to buy an apartment?

Yes. If you’re intending to rent the property out, you may be able to get a commercial mortgage, subject to a strong business case that includes a reasonable deposit and good evidence of rental demand in the area. Being able to put up some collateral might also stack the deck in your favour.

You could also use a (presumably larger) commercial mortgage to buy a block of apartments. This is likely to be more expensive (and more difficult) - so you may need to look for a specialist commercial lender.

Again, a whole-of-market broker may be able to help you here.

Are commercial mortgage rates for apartments higher than residential?

Yes, they’re usually higher and you’re unlikely to find them disclosed upfront. This is because commercial lending is usually bespoke and tailored to the individual, with lenders determining which rates to offer after conducting a thorough eligibility check.

Although commercial mortgage providers don’t usually advertise their rates, the specialist brokers we work with can introduce you to the commercial lender who is best positioned to offer a favourable deal to a borrower with your profile.

Make an enquiry here to speak to a commercial mortgage broker today.

Where can I find a commercial apartment mortgage calculator?

You can find commercial mortgage calculators on various mortgage websites and financial hubs.

But keep in mind that an online calculator can only give you a rough outline of what you might be able to borrow.

Speaking to an expert is a better option than using a calculator. For example - you could use 10 different mortgage calculators and they could all return different results.

So, if you want a much more accurate representation, get in touch. We’ll connect you with a friendly, expert advisor who’ll help you to fully examine your options.

Need some help getting a mortgage for an apartment?

If you have questions about buying an ex-council property and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 25th June 2019
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of 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 info 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 who 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.