Mortgages On Properties In A Flood Zone

Find out how to get a mortgage on a home that is in danger of floods

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Home Property Types Mortgages On Properties In A Flood Zone
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.

August 18, 2022

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.

If your home is at high risk of flooding, some lenders might decline your mortgage application. 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, is it 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 there is government help available for many harder-to-insure homes.

Which zone is your home in?

There are four types of flood zone defined by the Environment Agency 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 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.

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Flood insurance and your mortgage application

All lenders require you to have buildings 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 very 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.

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How a broker can help with mortgages on flood risk properties

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

1. Finding the right insurance

Your broker can compare buildings insurance deals to make sure that you’re sufficiently covered to get a mortgage, at a price you can afford. They will also advise you on whether you need contents insurance, and what level of cover 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 the flood risk of your property but also on your deposit size, income, credit history, and a range of other factors. Because they will take into account 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 you a new deal with a lender who looks more favourably at properties in flood zones. Find a broker here.

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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 in 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), but 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 give you advice on this situation. They can give you many of the answers you need on what cover is available and whether you’ll be able to 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 free broker-matching service and we’ll put you in touch with someone for a no-obligation chat. For expert advice, call us today on 0808 189 2301 or enquire online.

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FAQs

For insurance purposes, a flood can be caused by overflow from a river or sea, or excess surface water (i.e. heavy rainfall). It does not necessarily have to be a natural event, though, as it could be from a bath or boiler in your home. Different insurers treat these instances differently, so you should check your policy to see exactly what you’re covered for.

It’s certainly worth looking into. If you have buildings insurance that does not include flood insurance, you may have unintentionally broken your mortgage contract, which can have serious consequences, including possible repossession of your home.

You will also be at risk of significant financial loss if your home is flooded. In the UK, your home is more likely to be flooded than burgled. In flood zone 3, flooding is a higher risk than house fire.

Whilst there’s no legal requirement for it, a lender can certainly make this a condition for them to approve an application. This is especially likely if the property resides in a high risk flood area.

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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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