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Mortgage on studio flat

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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* | Published: 22nd March 2019

Studio flats are understandably popular with singles and couples living in areas where house prices are high. Despite their relative affordability, studio flats can often be difficult to get a mortgage on.

In this article, we’ll talk about studio flat mortgages and what you need to bear in mind when applying for one.

Trying to arrange finance for a studio flat? Get in touch - the expert advisors we work with may be able to help you.

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Can I get a mortgage on a studio flat?

Yes you can, depending on your individual circumstances. Various types of mortgage, including residential and buy to let are available for studio flats, but whether your application is successful will depend on how closely you meet the lender’s eligibility requirements, which can be more stringent than for other types of property.

Depending on where the studio is located, it may be deemed ‘non-standard’ by your prospective lender - which means that may offer less favourable terms, or refuse to lend outright.

For flats inside blocks, lenders will often put more stock in the comments of the surveyor/valuer than they would for other kinds of property. If the surveyor reckons that the property has resale potential, your lender will be more inclined to work with you.

Studio flat mortgage criteria

Asides from your personal profile (which we’ll cover below), financing a studio flat often comes downs to a few things...

The size and design of the flat

Despite the recent growth in ‘micro homes’, some lenders just aren’t keen on lending on flats below a certain size - usually 30 square meters, though there can be some exceptions (depending on the lender and the property in question).

In terms of configuration, there are certain design features which some lenders prefer. For example, lenders will favour a flat in which the kitchen area is separate from the main area - and they’ll be put off by one in which the entrance is accessed via an exterior walkway.

The design and surroundings of the building in which the flat is located are important too.

Any nearby commercial property

A flat located adjacent to or above to another commercial property can be problematic. Lenders are particularly wary of nearby noisy commercial activities, such as nightclubs and bars - or businesses which could pose a fire risk (such as restaurants).

The construction and height of the building

Flats in buildings that are seven floors and up can cause problems with some lenders. Some (but not all) kinds of concrete construction can also put lenders off. The opinion of the surveyor can be particularly important here and lift access is preferred by some mortgage providers, especially on multi-storey buildings.

The amount of time remaining on the lease

Assuming it’s a leasehold property (which the majority of flats in the UK are), most lenders prefer there to be a long time remaining on the lease. Properties with short leasehold agreements in place are considered higher risk due to being more difficult to sell.

What affects if I can afford a mortgage on a studio flat?

The above affects how much risk the flat itself may present to a lender.

Below we’ll cover some things that affect how much of a risk a lender sees you as.

Your income sources

A lender is very interested in how much you make (and how you make it). In their ideal world, you derive all of your income from a huge PAYE salary. If you’re self-employed, get paid bonuses, or have more ‘unorthodox’ income sources, lenders may deem you as ‘non standard’.

That said, there are specialist lenders who cater to the self-employed and people who make much of their money from bonuses. The advisors we work with can help you to find them.

The additional costs involved

When calculating your affordability, most lenders will take into account the extra charges that come with flat ownership, including the annual/monthly cost of the lease, service charges and ground rent. These will likely be factored into your debt-to-income ratio.

How much of a deposit you have

The larger your deposit (and the lower your loan to value (LTV) ratio) the happier the lender. The minimum deposit requirement you’re likely to need for a studio flat is 10% (if it’s a standard residential property), although some lenders might accept 5% under the right circumstances.

Your credit history

The cleaner your credit history, the better.

Some marks on your record may not be a barrier to entry - but if you have a more serious issue, such as a recent bankruptcy, you may need to find a more specialist lender. Take a look at our guide to bad credit mortgages if you want to know more.

If you’re still concerned about your credit history, just get in touch. The advisors we work with are experts in helping people to find finance, even if bad credit is a factor.

Your age

Certain lenders set upper limits on the age of an applicant (at some it’s 75, others 85). Some don’t mind, provided you can show that you’ll be able to make your payments beyond retirement.

Older people may want to consider a specialised retirement property instead. These are often offered at a below market rate, and only available to people in their 60s and over.

Can I get a mortgage on a studio flat for buy to let (BTL)?

Assuming that a lender isn’t put off by the construction or configuration of the property, getting a BTL mortgage for a studio flat could be possible - with the right lender of course.

As is standard, you’ll probably need to provide a larger deposit (most lenders have a minimum requirement of 15%), and good evidence of the rental market in the local area. Some lenders will be more open to the idea if you’re willing to offer up some collateral.

Most buy to let mortgage providers base their lending decision on the viability of the investment, i.e. whether the forecast rental payments will cover the mortgage payments. For more information visit our page on buy to let mortgages or make an enquiry.

Are there any specific studio flat mortgage lenders?

All things being equal, some lenders take a more favourable view on studio flats. There isn’t really one firm that is best for this, as every borrower’s circumstances are unique, every lender has its own criteria, and the market is always changing.

Get in touch and we’ll see if the advisors we work with can find the perfect lender for you.

Need a little help? Speak to the experts

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 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: 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.