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Mortgage on High Rises and Blocks of Flats

Looking for a mortgage on a high rise flat? Find out how to go about it here.

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By Pete Mugleston   Mortgage Advisor

Last updated: 10th May 2019 *

Many people are attracted to the centrality and lifestyle that a ‘high rise’ flat can provide and others find that they’re a lucrative investment. But, as many prospective buyers have found, getting the finance to buy in a high rise is not always as simple as you might think.

Trying to get a mortgage on a high rise flat? We may be able to help.

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What exactly is a high rise flat?

There isn’t really an agreed single definition of ‘high rise’. Most lenders tend to use the term to describe any apartment building that is 7 stories or taller.

High rise flats have been around for decades now, large numbers of them were built by councils in the 1960 and 70s as a cheap way to house growing urban populations. Today, newer and more expensive high rises are being built in high growth areas all across the country.

Over time, some lenders are becoming more open to the idea of lending on high rise flats. However, there are still some tricky cases, particularly involving ex-council properties and concrete construction.

Can you get a mortgage in a high rise block of flats?

Yes - in many cases. But it might be more tricky than normal.

Mortgages for high rise flats can be harder to find, simply because of the height of the building itself - which tends to put a lot of lenders off.

We’ll cover this in more detail later.

The two main factors that will determine whether you can get a mortgage or not will be:

  • Your financial circumstances
  • The building and flat itself

We’ve covered both of these below.

Your financial circumstances

In the same way that no two high rises are the same, no two borrowers are the same. Here are some of the things that lenders will look at when considering your application.

Your income sources

Lenders like applicants who make 100% of their living from a sizeable PAYE salary. If you’re self-employed, or have other income sources such as overtime or bonuses, lenders will probably deem you as ‘non-standard’.

That said, there are many specialist lenders who are more sympathetic to people with unusual income - the advisors we work with can connect you with them,

Your deposit

The greater your deposit, and the lower the LTV, the better your chances of securing the loan.

Your credit history

Lenders reserve their best rates for people with immaculate credit. Bad credit can reduce the number of lenders available to you, but isn’t necessarily a deal breaker.

Take a look at our guide to bad credit mortgages or drop us a line. The expert advisors we work with are particularly talented at finding the right lender for you, even if you have credit issues.

Your age

Some lenders set an upper limit on who they lend to. Others don’t mind, provided there’s evidence that you’ll be able to make your payments into later life and retirement.

Your personal circumstances

Your expenditure and existing financial obligations will be ‘stress tested’ by a lender to determine that you could make the payments, even were interest rates to rise.

The lender will look at everything - such as other properties that you have a mortgage on, to how much you regularly spend on childcare. As such, it’s often wise to try and cut unnecessary expenditure in the time leading up to your application.

The flat itself

No two flats are the same. Here are some of the variables that lenders will look at when considering whether to make you an offer.

The height of the building (and the location of the flat within the building)

As mentioned earlier - typically anything above 7 (sometimes 10) stories will put lenders off. Some lenders are OK with buildings at 7 stories or over, provided your flat is located below the 7th floor. Most lenders will require that if the block has 5 or more storeys then it must have a lift.

What the building is made from, and how it is configured

Certain types of construction (in particular, some varieties of concrete) are a big no-no for lenders. Buildings without lifts can be a problem, as can those with exterior walkways or “deck access” as it’s also known.

Where the flat is located in the UK

Lenders are often more open to financing purchases in more populous, high growth metropolitan areas - like London.

The lender’s ‘exposure’

Lenders often limit their risk by not lending on numerous flats in the same building, normally around 20%. This is more of an issue with high rise flats (in which there can be many flats in one structure).

Since there are fewer lenders in the high rise space, the odds that your prospective lender has already lent on other flats on the building is higher. If this is the case, they might not want to make you an offer, even if everything else checks out.

How many years are left on the lease, and if there are any planned works on the building

Leases below 70 years can deter lenders (because extending the lease will become increasingly more expensive as the clock runs down).

Lenders are also wary of any expensive maintenance works that are due in the near future (which can be reflected in hefty service charges).

Can I get a buy to let mortgage for a block of flats?

Let’s say you’re looking to buy a block of flats with a view to renting each unit out to residential tenants. It may be possible to take out a special type of buy to let mortgage for the purchase of the entire building, but not all lenders offer these.

The product you would need is known as a ‘multi-unit freehold mortgage’ and the lenders which offer these usually place a cap on the number of individual units the property can include - anything between five and ten is standard.

If you’re looking to purchase an individual unit within a high rise flat to rent out to tenants, this could be possible on a standard BTL mortgage.

Can I get a commercial mortgage for a block of flats?

If you were purchasing an block of flats that has more than 10 individual units within (like most high rise properties do) as an investment, a multi-unit freehold mortgage would be difficult to obtain due to the lender restrictions that are in place.

There may, however, be other options available as a specialist commercial lender might consider offering you a business mortgage on the entire block of flats.

Commercial mortgages are assessed and work differently to residential mortgages. For more information about this type of lending, visit our commercial mortgages  or development finance sections.

How do I find mortgage lenders for high rise flats?

A specialist lender is often required for high rise flat mortgages, especially if you’re aiming to take one out for investment purposes. As fewer providers will consider these properties, the most favourable rates can be more difficult to come by.

There’s good news, though: the advisors we work with are whole-of-market and can help you find the best high rise flat mortgage deals that you qualify for. They arrange mortgages on these properties every day and can introduce you to the lender who is best positioned to offer one to a borrower with your needs and circumstances.

Make an enquiry here and the experts we work with will help you find the right lender.

Talk to a high rise flat mortgages expert

If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0800 304 7880 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: 10th May 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.