Studio Flat Mortgages

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Pete Mugleston Nathan Porter

Author: Pete Mugleston - Mortgage Advisor, MD

Reviewed By: Nathan Porter - Independent Mortgage Advisor

Updated: August 18, 2023
August 30, 2022

Studio flats are compact properties that typically incorporate the living area, bedroom and kitchen in a single space.  They are popular with renters in central locations and people looking to get on the property ladder in areas where prices are prohibitively high.

Despite what you may have heard, it is possible to get a residential or buy-to let mortgage on a studio flat.

In this article, we’ll explain why it can sometimes be difficult to get a mortgage on this type of property, what you can do to give your application the best chance of success and how a broker can help you get approved.

Can you get a mortgage on a studio flat?

Yes. The good news is mortgages on studio flats are not rare. However, each lender has their own view on these types of properties, with some choosing to avoid them altogether. And you may pay a higher rate than you would if buying a more ‘standard’ property.

When determining lending policy, mortgage providers are concerned with resale value. If they have to repossess the property, they want to be able to sell quickly, easily and without making a loss. Lenders that view studio flats as undesirable are less inclined to lend on them.

So, it is not always easy to get a mortgage on a studio flat – unless you know the right places to look and where to turn for the right advice.

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Lending criteria for these properties

In addition to their standard eligibility factors, those mortgage providers that do lend on studio flats have their own underwriting criteria for this property type too. Some of these will relate to the property, and some to the borrower.

Factors that concern the property

In many cases, mortgage providers will place greater emphasis on the surveyors’ comments regarding the likelihood of a resale, than they might on other property types.

Issues likely to limit the number of providers who will approve your loan include:

  • The size of the property: Most lenders will not lend on any property that is smaller than 30 square metres. Others draw the line at 50 square metres, while some specialist lenders will look at each property on its own merits. Areas like London are popular for people seeking ‘micro homes’, for example, and this is a developing market in the capital.
  • Property configuration: While a studio typically includes one living space, a lenders’ minimum size for lending encompasses all properties. So, any flat measuring, for example, 30 square metres, will effectively be assessed as a ‘studio’ by some providers. Many, though, are more likely to approve a loan for a property with a separate kitchen area.
  • Location: Apart from the geographical location (i.e. city centre), lenders will also be interested in the area that surrounds the studio flat. A flat above or adjacent to a commercial premises will be a concern, particularly if the commercial activities include noise (ie nightclubs) or smells (ie takeaways) that might cause an issue with any resale. With that said, there are lenders who will consider mortgages for flats above commercial properties.
  • Construction: Non-standard constructions are always a concern for lenders. If the property, or the building in which it resides, is built of anything other than bricks and mortar, you may need to speak to a lender that specialises in non-standard construction mortgages.
  • Height of the building: Flats located in buildings that are seven storeys or bigger, will be harder to obtain a mortgage for as fewer lenders will consider your application. However, if the building includes a lift, your pool of potential lenders will increase.
  • Property value: Some lenders will only lend on studio apartments valued at £150,000 and above.
  • Self-contained: Approvals are easier for self-contained properties with private facilities.
  • Length of the lease: Most flats are leasehold properties and, the shorter the lease, the harder they are to sell.

Factors that concern the borrower

As studio flats are deemed higher risk than some other properties, lenders can also have strict eligibility criteria for borrowers. These include:

  • Credit history: Each lender views bad credit according to their own risk profile. It’s not impossible to get a mortgage with recent or serious adverse, but these are factors that will significantly reduce your choice of lenders. As studio flat mortgages are harder to come by anyway, if you have any history of bad credit, you’re strongly advised to speak to a specialist broker.
  • Deposit amount: Many lenders will insist on a deposit of at least 10% (in some cases up to 35%) for a studio flat. If you have been saving for a 5% deposit to get you onto the property ladder, don’t be too disheartened by this as there are a handful of lenders who will accept a 5% deposit – and even some who will approve a 100% mortgage. A bigger deposit will give you access to more lenders and, subsequently, more favourable rates.
    Where the increased deposit proves an issue, you may want to consider a family offset mortgage, if you have family members willing to use their equity to support your application.

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How a broker can help you get approved for a studio flat mortgage

It’s always worth speaking to a whole of market broker when looking for a mortgage, but this is particularly important when you’re in the market for a niche product like a mortgage for a studio flat, as your choice of providers is already limited.

Each lender has their own criteria when it comes to this type of lending. A broker who specialises in this property type will quickly whittle down your options so you can focus on the features and benefits of those products you have a realistic chance of being approved for.

They have deep working relationships with lenders who offer mortgages for studio flats and might even be able to secure you an exclusive, broker-only deal.

Which lenders will consider your application?

Some big-name lenders such as Bank of Ireland and Virgin Money will not accept applications for studio flats, but there are plenty of household names that will, including:

  • Barclays
  • Halifax (applications only accepted via a broker)
  • HSBC
  • Metro
  • Nationwide
  • Santander (applications only accepted via a broker)

The brokers we work with have inside knowledge of studio flat lending criteria and will help you cut through the plethora of potential problems and focus on the lenders and products suited to your circumstances.

Getting a buy to let mortgage on this property type

A buy-to-let studio flat can be a good investment in a city centre location that has an active rental market. And there are plenty of lenders willing to approve this type of loan. However, most providers have strict criteria, and these vary significantly between lenders. So it’s difficult to put together a definitive list of factors to be aware of.

Some providers assess applications on a case-by-case basis, and these can be the best ones to approach in complex circumstances. But getting approved relies on knowing how best to package your application.

The best rates are typically offered by lenders who take on less risk, so those that insist on a deposit of 30% will usually give you the best deal – if you match all their criteria. Typically, the projected rental payments will need to equate to 125% of the monthly mortgage repayments.

Get matched with a mortgage broker who specialises in studio flat mortgages

Studio flat mortgage lending is a complex market. As such, finding a broker with experience in this niche is crucial to a hassle-free experience that ends with you getting the best deal.

Our broker matching service will assess your personal details, and those of the property you are looking to buy, before putting you in touch with an experienced broker who has a track record of getting the best deal for people in your position.

Call today on 0808 189 2301 or enquire online to be put in touch with a studio flat mortgage broker.

Maximise your chance of approval with a broker who specialises in getting a mortgage on a studio flat

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Studio flats are often seen as a good option for investors as they can be relatively cheap to buy and the overall costs can be lower than other property types. They are also in high demand with certain types of renters and the rental yields can be competitive.

These properties can, however, be more difficult to sell, especially if they are particularly small or located above or next to a commercial premises.

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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!

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Pete Mugleston

Mortgage Advisor, MD

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