Mortgages On Properties In a Flood Zone

Flooding is increasingly common in the UK, and according to the Environment Agency, around one in six properties is at risk of it. Flood damage costs over £1 billion every year in England alone.

Some lenders might decline your mortgage application if your home is at high risk of flooding. This article will help you understand how flood risk affects your mortgage and what you can do to improve your chances of mortgage approval.

We’ll cover the following topics…

Can you get a mortgage on a property in a flood zone?

Yes. Even if you’ve had a mortgage refused due to flood risk, it is still possible to find a mortgage for a home situated in a flood zone if you have the right insurance. Flood insurance can be expensive, but government help is available for many harder-to-insure homes.

Which zone is your home in?

The Environment Agency defines four types of flood zones for housing planning purposes, with varying levels of severity.

• Zone 1 indicates an area with low risk (less than 0.1% chance of flooding each year)
• Zone 2 indicates an area with a higher risk (0.1-1% chance of flooding each year)
• Zone 3a indicates an area with high risk (more than 1% chance of flooding each year)
• Zone 3b indicates an area with the highest risk (more than a 5% chance of flooding each year)

You can check which zone your home is in with the Environment Agency in England, Natural Resources Wales, the Scottish Environment Protection Agency, or the Rivers Agency in Northern Ireland and via our free online tool.

Flood insurance and your mortgage application

All lenders require you to have building insurance before they’ll give you a mortgage in case any damage occurs that could seriously reduce the value of your home. You will need to insure your home for at least the reinstatement value of the property so that the lender isn’t at risk of loss.

Building insurance usually includes flood insurance. However, if your property is in an area at high risk of flooding, some insurers will want to exclude it from your policy. Including flood cover may mean that your excess is very high or your insurance premiums are expensive.

You might also need more than one type of insurance. Buildings insurance typically covers:

• Drying out and repairing the building you live in and any permanent fixtures
• Removing debris
• Professional and legal fees

It may also include alternative accommodation if your home is uninhabitable, but this often costs extra. It does not include the contents of your home. For that, you’ll need contents insurance, which covers:

• Repairing or replacing furniture and belongings
• Damage to carpets and temporary fixtures in your home
• Some electrical goods, usually up to a certain value limit

Affordable flood insurance for high-risk zones

Because there are no mortgage companies that don’t require flood insurance, you’ll need to find insurance which is sufficient but still affordable. Flood Re is an initiative from the government and insurers to help you do this by helping to subsidise the cost of flood insurance in high-risk zones.

How a broker can help with mortgages on flood-risk properties

A broker will know and, more importantly, have experience in obtaining mortgages for properties within flood risk areas, helping with:

1. Finding the right insurance

Your broker can compare building insurance deals to ensure you’re sufficiently covered to get a mortgage at an affordable price. They will also advise you on whether you need contents insurance and what level of coverage you need.

2. Choosing a mortgage deal

A broker can look at the mortgage deals that are available to you. This won’t be based only on your property’s flood risk but also on your deposit size, income, credit history, and a range of other factors. Because they will consider all of the details of your financial situation, you can be sure they’ll find you the best deal.

3. Helping you if you’ve been refused a mortgage

If you’ve had a mortgage refused due to flood risk, a broker can advise on precisely why this was and what you need to do before reapplying (e.g. increasing your insurance or saving a larger deposit). They will either help you appeal the decision or find a new deal with a lender looking more favourably at flood zone properties. Find a broker here.

What to do before buying a property in a flood zone

If you’re thinking about buying a house that has flooded before or is in a high-risk area, there are several things you should do first.

• Request detailed searches, including a flood report, from your solicitor
• Check what flood zone the property is in
• Check if the property is eligible for the Flood Re scheme
• Consider ways to reduce the risk, such as installing flood barriers
• Find out more information from the National Flood Forum

Just because a property is located in a high-risk zone isn’t necessarily a reason not to buy it (and may help you to buy it at below-market value). Still, you need to be sure you understand the likelihood of flooding and have planned for the potential costs involved.

Speak to a broker experienced in mortgages in flood-risk areas

Another crucial step before buying a home in a flood zone is speaking to a broker who can advise you on this situation. They can give you many of the answers you need on what cover is available and whether you can get a mortgage.

There are specialists in mortgages for every type of property, and we work with numerous brokers who specialise in mortgages for homes in flood zones. So, if you have any questions, you might like to try our broker-matching service, and we’ll connect you with someone for a no-obligation chat. For expert advice, call us today on 0330 818 7026 or enquire online.