Mortgage on high rises and blocks of flats

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Mortgage on High Rises and Blocks of Flats

Mortgages for high-rise flats in the UK come with their unique set of challenges and considerations. From the complexities introduced by cladding concerns post-Grenfell to the intricacies of ground rents and service charges, potential buyers must navigate a maze of factors that can influence their mortgage application and terms. Our comprehensive guide aims to demystify these challenges, providing clarity on each aspect of high-rise flat mortgages.

Whether you’re a first-time buyer or looking to remortgage, understanding these nuances is crucial in making informed decisions and ensuring a smooth property transaction. Dive in to equip yourself with essential knowledge and insights tailored to the high-rise property landscape.

Can you get a mortgage on a block of high-rise flats?

You can get a mortgage on a flat within a high-rise block in the UK. Many individuals do so, especially in urban areas where such properties are common. However, securing a mortgage on an individual flat and purchasing an entire block of flats are two different scenarios. If you’re considering buying the entire block of flats, this would typically fall under commercial or property development lending rather than traditional residential mortgages. This type of venture involves a different set of considerations and financial structures.

When looking to secure a mortgage for a flat within a high-rise, various factors come into play. The valuation of flats in such buildings can be influenced by elements like the building’s age, location, and the quality of construction and maintenance. Additionally, post the Grenfell Tower tragedy, lenders have become particularly cautious about the materials used in the construction of high-rise buildings. Safety certifications, especially concerning cladding, may be required.

The length of the lease is also crucial; lenders generally prefer leases that have a substantial term remaining, often 70-80 years or more. Service charges and ground rent, which are ongoing costs associated with owning a flat in such a structure, can also impact the mortgage’s affordability calculations. Not all lenders may offer mortgages for high-rise flats, and specific criteria or rates might apply to those that do.

If you’re interested in purchasing an entire block of high-rise flats, it’s advisable to approach commercial lenders or banks that specialise in large-scale property finance. The terms and considerations for such a loan or mortgage would differ significantly from those of a standard residential mortgage.

How do I get a mortgage for a high rise flat in the UK?

Obtaining a mortgage for a high rise flat in the UK requires a series of steps similar to securing a mortgage for any other property, but with added considerations. First, you’d start by assessing your financial situation, ensuring that you have a stable income, a good credit rating, and a deposit saved. Then, you’d typically approach a mortgage broker or lender to get an agreement in principle. This gives you an idea of how much you might be able to borrow based on your income and financial status.

Searching for a suitable high rise flat is the next step. While looking, be mindful of certain unique aspects associated with high rise flats. For instance, the safety of the building is paramount, especially in light of the Grenfell Tower tragedy. You may find that some lenders require specific safety certifications, particularly concerning cladding before they offer a mortgage.

Another consideration is the lease length of the flat. A longer lease, often with 70-80 years or more remaining, is generally preferred by lenders. You’d also need to account for service charges and ground rent when calculating your monthly expenses.

Once you’ve found a flat that meets your requirements, you would make an offer. If accepted, you’d then formally apply for the mortgage. The lender would assess the property, possibly requiring a valuation or survey. They’ll check the property’s value, the safety of the building, and any other concerns that might affect its mortgageability.

If everything is in order, and the lender is satisfied with the property and your financial status, they would then issue a mortgage offer. Following this, the legal processes, such as conveyancing, would commence. After all the checks are complete, the funds would be released, and you would become the owner of a high rise flat.

Eligibility criteria

Eligibility criteria for obtaining a mortgage on a high rise flat in the UK typically revolve around both the individual’s financial standing and the specifics of the property in question. Here’s a general overview of what lenders might look at:

Personal Financial Criteria:

Credit Score: A good credit score is essential for most mortgage applications. It indicates your reliability as a borrower.

Income: Steady income, whether salaried or from self-employment, helps lenders assess your ability to meet monthly repayments.

Deposit: Typically, a deposit of at least 10% of the property’s value is required, though this can vary.

Existing Debt: If you have other substantial debts, it might affect how much you can borrow.
Employment Status: Being in stable, long-term employment can be favourable.

Age: Some lenders have age limits for when the mortgage term ends.

Property-Specific Criteria:

Lease length: For leasehold properties, like most high rise flats, lenders often prefer at least 70-80 years remaining on the lease.

Building safety: Post-Grenfell, the safety of high-rise buildings, especially regarding cladding, is a significant concern. The EWS1 (External Wall System) form might be requested to ensure the building’s cladding is safe.

Building condition: A survey or valuation might highlight any structural issues or required repairs that could affect the mortgageability.

Service charges and ground rent: High service charges or ground rents can impact affordability assessments.

Floor level: Some lenders have specific criteria or concerns about flats on very high floors.

Building amenities and features: Amenities like swimming pools or gyms might have implications on service charges and insurance.

Loan Details:

Loan-to-value (LTV) ratio: The amount you wish to borrow compared to the property’s value.

Mortgage term: The length of time over which you intend to repay the mortgage.

Type of mortgage: Whether it’s a fixed-rate, variable-rate, interest-only, etc.

While the above outlines general eligibility criteria, it’s essential to consult with mortgage advisers or lenders directly. Each lender may have its own set of criteria, and the UK’s regulatory environment can influence lending practices.

How to get a multi-unit mortgage

Getting a multi-unit mortgage involves securing financing for a property that has multiple individual units, which can either be residential or mixed-use. This type of mortgage is commonly sought by investors or developers who wish to rent out multiple units within the same property.

To begin with, it’s essential to understand that multi-unit mortgages often fall under commercial lending rather than traditional residential lending. This means that the process and criteria can differ somewhat from standard home mortgages.

Start by assessing your financial situation. Ensure you have a clear record of your income, expenses, assets, and liabilities. Given the commercial nature of multi-unit mortgages, lenders will want to see a strong financial position and may require a larger deposit compared to residential mortgages. A solid credit history is also crucial.

Research is paramount. Understand the local property market, expected rental incomes, and property values in the area where you’re looking to buy. Lenders will want to know that the investment is sound and that the rental income can adequately cover the mortgage repayments.

When you approach lenders, be prepared with a comprehensive business plan if you’re an investor or developer. The business plan should detail your strategy for the property, expected income, and your experience in managing or developing multi-unit properties. Lenders will assess the viability of your plans and your capability to execute them.

The property itself will also undergo scrutiny. Lenders will typically require a professional valuation to determine the value of the property and assess its condition. They will also want to understand occupancy rates if the units are currently rented and may look into the rental history of the property.

As with any mortgage, it’s essential to shop around. Different lenders will offer various terms, interest rates, and loan amounts. Consider approaching banks that specialise in commercial or multi-unit lending, as they may offer more favourable terms or have more experience in this area.

Lastly, given the complexity of multi-unit mortgages, consider working with a mortgage broker who has experience in commercial lending. They can guide you through the intricacies, help you find the best deals, and assist in preparing the necessary documentation.

Remember, while the potential returns on multi-unit properties can be attractive, they also come with added responsibilities and risks. Ensure you’re well-informed and adequately prepared before diving into such an investment.

How easy is it to get a mortgage on a single high rise flat?

Obtaining a mortgage for a single high-rise flat in the UK can be somewhat challenging, though it’s certainly feasible. The process’s complexity often depends on both the applicant’s personal financial situation and the specific characteristics of the high-rise flat in question.

Your personal credit history, employment status, income stability, and the size of your deposit are crucial factors in securing any mortgage, including those for high-rise flats. Lenders typically favor applicants with a robust credit history, stable and sufficient income, and a significant deposit, usually at least 10% of the property’s value.

However, high-rise flats have unique characteristics that lenders take into account during the application process. For instance, the flat’s location, its floor level, the overall condition of the building, and the length remaining on the lease can all influence a lender’s decision.

Additionally, the building’s construction materials and compliance with current safety standards, particularly regarding fire safety and cladding, are critically examined in the wake of the Grenfell Tower tragedy. Buildings that don’t meet these standards might be deemed high risk, leading many lenders to reject mortgage applications on flats within them.

The service charges and ground rent associated with the flat are additional considerations, as these ongoing costs will impact your overall affordability assessment conducted by the lender.

While the process might sound daunting, it is indeed possible to navigate it successfully with careful planning and the right advice. Working with a mortgage broker experienced in high-rise flats can be invaluable. They can guide you through the application process, helping you understand what lenders are looking for and advising you on how to present your application in the best light.

So, while securing a mortgage on a high-rise flat may not be as straightforward as it is for other types of property, with the right preparation and advice, it’s certainly within reach for many buyers.

Which UK lenders offer mortgages for high rise buildings?

In the UK, many mainstream lenders and some specialist lenders offer mortgages for high-rise flats. However, the specific criteria, terms, and conditions can vary significantly between lenders, especially concerning the height of the building, the floor on which the flat is located, and recent building safety regulations, such as cladding concerns post-Grenfell.

The following are some of the major UK banks and building societies that offer mortgages for properties in high-rise buildings:

Nationwide building society: They do provide mortgages for flats in high-rise buildings, but the criteria can be stringent, especially concerning the remaining lease length and building safety.

HSBC: They also offer mortgages for high-rise flats, though they have specific criteria depending on the location and the flat’s floor level.

Barclays: Like many other lenders, Barclays will consider the property’s specific characteristics, its location, and any potential risks before offering a mortgage.

Santander: They have been known to provide mortgages for high-rise flats but will typically require a detailed valuation of the property.

Lloyds banking group (which includes Halifax, Bank of Scotland, and Lloyds Bank): They offer mortgages for flats in high-rise buildings, but the exact terms can depend on the property’s characteristics.

In addition to these mainstream lenders, there are specialist lenders and brokers who might consider applications that do not fit the typical criteria of the major banks. These can be especially helpful if the property has unique features or if there are specific concerns related to building safety.

How do mortgage lenders view properties with short leases in high rise buildings?

Mortgage lenders in the UK tend to be cautious when it comes to properties with short leases, especially in high-rise buildings. The primary concern is that the diminishing length of the lease can significantly affect the property’s value. As the lease term decreases, the property might become less attractive to potential buyers, making it harder to sell or remortgage in the future.

For high-rise flats, lenders will also consider the specific challenges and risks associated with such properties, such as building maintenance, safety standards, and service charges. When combined with a short lease, these factors can make the property appear even riskier to a lender.

In general, many lenders prefer properties to have a substantial lease term remaining, often 70-80 years or more. If the lease is below this threshold, it might limit the number of lenders willing to offer a mortgage, or they might offer less favorable terms. If the lease term is very short, say below 50 years, finding a mortgage can be particularly challenging.

It’s worth noting that lease extensions can be sought, though the process can be expensive and time-consuming. If someone is considering purchasing a high-rise flat with a short lease, it might be worth investigating the possibility and cost of extending the lease either before purchasing or as a condition of the sale.

What are the risks associated with mortgages for high rise flats in the UK?

Mortgages for high-rise flats in the UK come with several unique risks, both for the lender and the borrower. Here’s a look at some of the main concerns:

Building safety: Following the Grenfell Tower tragedy in 2017, the safety of high-rise buildings, especially concerning cladding and fire hazards, has become a significant concern. Flats in buildings that don’t meet safety standards might be hard to mortgage, and existing owners might find it challenging to sell or remortgage their properties.

Short leases: High-rise flats are typically leasehold. As the length of the lease decreases, the property can lose value. Mortgages might be harder to obtain for flats with short leases, and the cost of extending the lease can be substantial.

Service charges and ground rent: High-rise flats often come with service charges for building maintenance and communal services. These charges can be unpredictable and may increase over time. Some leases have ground rents that can escalate, affecting affordability and the property’s resale value.

Difficulty in selling: Depending on market conditions, high-rise flats, especially those in older buildings or less desirable locations, can be harder to sell compared to other property types.

Building maintenance: Major repairs or maintenance work in high-rise buildings can be costly. If the building management decides to undertake significant works, the costs are typically shared among the flat owners.

Economic fluctuations: In economic downturns, flats, particularly in high-rise buildings, can sometimes be more affected by price drops compared to houses.

Over-reliance on lifts: In very tall buildings, if lifts become non-operational, it can pose challenges for residents on higher floors, potentially affecting the desirability of the property.

Environmental factors: High-rise flats might be more exposed to weather conditions, leading to higher maintenance costs or damages over time.

Future development: Nearby future developments can affect the view, desirability, and value of a high-rise flat.

Lender restrictions: Many lenders have specific criteria for high-rise flats, such as restrictions on lending to properties above a certain floor or in buildings of a particular height.

For prospective buyers, it’s essential to be aware of these risks and conduct thorough research before purchasing. Consulting with property experts, solicitors, and mortgage brokers who are familiar with high-rise properties in the UK can provide valuable insights and guidance.

Are there any benefits to getting a mortgage for a high rise flat versus a traditional property?

Yes, there are benefits to getting a mortgage for a high-rise flat in comparison to a traditional property, although the advantages will vary depending on individual preferences and specific circumstances. Here are some potential benefits:

Urban living: High-rise flats are often located in city centres or densely populated areas, offering convenient access to workplaces, public transportation, entertainment venues, and other amenities. This can reduce commuting time and associated costs.

Views: One of the unique advantages of high-rise living is the potential for panoramic views. A flat located on an upper floor can offer stunning vistas of the city skyline, water bodies, or other scenic landmarks.

Security: High-rise buildings often come with added security features, such as concierge services, secure entry systems, CCTV monitoring, and sometimes even 24-hour security personnel.

Maintenance: While owners might have to pay service charges, the building’s overall maintenance, including communal areas, gardens, and external structures, is usually taken care of by building management. This can be less hands-on than maintaining a traditional house and its garden.

Amenities: Many modern high-rise developments offer residents access to on-site amenities like gyms, pools, communal lounges, rooftop gardens, and even shops or cafes.
Community: Living in a high-rise can foster a sense of community among residents, especially if there are shared facilities or organised events.

Environmental efficiency: High-rise buildings can sometimes be more energy-efficient on a per-unit basis compared to individual homes, especially in newer developments built with modern insulation and heating systems.

Potential for growth: In rapidly developing urban areas, high-rise flats can sometimes offer good capital growth potential and rental yields, especially if there’s increasing demand for city-centre living.

Smaller initial investment: In some areas, a high-rise flat might be more affordable than a traditional house, allowing first-time buyers or investors to get onto the property ladder or expand their portfolio with a smaller initial investment.

However, it’s essential to weigh these benefits against potential drawbacks and risks associated with high-rise living and mortgages, such as service charges, leasehold issues, and building safety concerns. Every buyer’s situation and preferences are unique, so it’s crucial to thoroughly research and consider both the advantages and disadvantages before making a decision.

What are high-rise flats in the UK?

High-rise flats in the UK refer to apartment units located in taller residential buildings. Typically, a building is considered high-rise if it has more than six to seven floors, although definitions might vary slightly depending on the context or specific locality. These buildings often contain multiple residential units on each floor and are equipped with elevators for easy access to upper levels. High-rise flats are commonly found in urban and densely populated areas, particularly in city centres.

They’ve become a popular housing option due to urbanisation and the increasing demand for centrally located homes. Over the years, many modern high-rise developments in the UK have incorporated luxury amenities, enhanced security features, and contemporary architectural designs. However, the safety and construction quality of high-rise flats have come under scrutiny in recent years, especially following the Grenfell Tower tragedy in 2017.

What is an ex-local authority flat and how does it differ from other high-rise flats when it comes to obtaining a mortgage?

An ex-local authority flat is a residential unit that was once owned and managed by the local council or a housing association but has since been sold to a private owner. These flats are often part of larger blocks or estates built to provide public housing. Over the years, many of these flats have been sold to tenants or other private buyers, particularly under schemes like the “Right to Buy” initiative in the UK.

When it comes to obtaining a mortgage for an ex-local authority flat, especially those in high-rise blocks, there are some distinctions and challenges compared to other types of properties:

Perception of quality: Ex-local authority flats, particularly those in older estates, might be perceived as being of lower quality in terms of construction and maintenance compared to privately developed high-rise flats.

Valuation: They may be valued lower than similar-sized properties in privately developed buildings within the same area. A lower valuation can impact the maximum mortgage amount a lender is willing to offer.

Lender restrictions: Some lenders might be wary of offering mortgages on ex-local authority flats, especially those in high-rise blocks or in estates with a significant number of rental units still under council ownership. The reasons can range from concerns about property maintenance to the overall reputation of the estate.

Lease length: Like other high-rise flats, the length of the lease can be a crucial factor. As many ex-local authority flats have been around for some time, the remaining lease might be shorter, which can affect mortgage eligibility.

Resale concerns: Some potential buyers might be hesitant about purchasing ex-local authority properties, fearing challenges in resale or potential stigma associated with council estates. This perception, whether valid or not, can influence lenders’ decisions as they consider the ease with which the property could be sold in case of repossession.

Service charges and maintenance: While service charges might be lower in ex-local authority properties than in luxury developments, potential issues with building maintenance or future significant repairs can be a concern for lenders.

Despite these challenges, it’s still possible to secure a mortgage for an ex-local authority flat. Working with a mortgage broker can be beneficial, as they can guide applicants to lenders who are more open to financing such properties. Each lender will have its criteria, so shopping around and understanding the specifics of the property and the lender’s requirements are crucial.

How do ex-local authority flats and ex-council houses differ in terms of obtaining a mortgage in the UK?

Ex-local authority flats and ex-council houses are both properties that were previously owned by local councils or housing associations in the UK. However, when it comes to obtaining a mortgage, there are notable differences between the two:

Ex-local authority flats are typically part of larger blocks or estates, and they may be located in high-rise buildings. Mortgage lenders may perceive these flats as being of lower quality or less desirable than privately developed flats, particularly if they are in older estates or high-rises.

Some lenders might be hesitant to offer mortgages on ex-local authority flats, especially if they’re in blocks with a significant number of rental units still under council ownership or if they have concerns about the maintenance and overall reputation of the estate. Valuations for ex-local authority flats can also be lower compared to similar properties in private developments, potentially affecting the maximum mortgage amount.

Ex-council houses, on the other hand, are individual homes that are often similar in appearance and construction to other houses in the UK. They tend to be more straightforward in terms of obtaining a mortgage compared to ex-local authority flats. These houses usually have a garden or outdoor space and are not part of large blocks, making them more appealing to many buyers and lenders. They don’t come with the complexities associated with shared common areas or the potential stigma related to high-rise council blocks. As a result, mortgage lenders often view ex-council houses more favourably, and there are generally fewer restrictions on lending for these properties.

That said, the specific location, condition, and other factors of the individual property always play a role in mortgage decisions. It’s advisable for potential buyers to work with a mortgage broker familiar with the local market and lender criteria to navigate the process efficiently.

Are there any specific regulations for mortgages on high rise flats in London?

Yes, there are specific considerations and regulations when it comes to mortgages on high-rise flats in London, especially in the aftermath of the Grenfell Tower tragedy.

London, being a dense urban environment with many high-rise developments, often has more stringent requirements for safety and building standards. One of the main concerns since the Grenfell incident is cladding. Many lenders now require an EWS1 form (External Wall System form) for flats in high-rise buildings. This form certifies that the external wall system has been inspected and meets fire safety standards.

Lease length is another significant consideration in London, given the large number of leasehold properties in the city. Many lenders require a certain number of years remaining on the lease for a property to be mortgageable, often preferring at least 70-80 years left on the lease.
Location within London can also impact a mortgage. Certain areas might be seen as more desirable or less risky, influencing lenders’ decisions on loan amounts and terms.

Lenders also look into service charges and ground rent associated with the flat. High-rise buildings, especially luxury developments, can have substantial service charges, which can affect an applicant’s affordability calculations.

While these are specific to London due to its unique property landscape, it’s essential to note that many of these considerations apply to high-rise flats elsewhere in the UK. As always, potential buyers are advised to consult with mortgage professionals familiar with the London market to understand the intricacies better and ensure a smooth mortgage application process.

What insurance do I need?

When getting a mortgage for a high-rise flat in the UK, there are specific insurance products you will need or might consider:

Buildings insurance: This is a mandatory requirement by most mortgage lenders. Buildings insurance covers the structural aspects of your flat, including walls, floors, ceilings, and fixtures. In the context of high-rise flats, the building’s management often arranges a collective buildings insurance policy for the entire block, and the cost is split among the flat owners through service charges. However, you’ll need to check with the building’s management to confirm this and provide evidence to your mortgage lender.

Contents insurance: While not usually mandatory for a mortgage, it’s highly recommended. Contents insurance covers your personal belongings within the flat, such as furniture, electronics, and other items. It protects against risks like theft, fire, and other damage.

Life insurance: Some lenders might require life insurance or suggest you have it as a condition of the mortgage. This ensures that if you pass away before the mortgage is paid off, the insurance payout will cover the remaining balance, relieving your dependents of the financial burden.

Critical illness cover: Though not compulsory, it’s another insurance worth considering. It provides a lump sum if you’re diagnosed with a specified critical illness, helping ensure you can keep up with mortgage payments if you’re unable to work due to illness.
Income Protection Insurance: This can cover a portion of your income if you’re unable to work due to illness or injury, helping ensure you can continue to meet your mortgage payments.

Mortgage payment protection insurance (MPPI): This covers your monthly mortgage payments for a set period if you’re unable to work due to an accident, sickness, or unemployment.

While these are the primary types of insurance associated with obtaining a mortgage for a high-rise flat in the UK, it’s crucial to assess your personal situation and consult with insurance professionals to ensure you’re adequately covered.

Refinancing an entire apartment building

Refinancing an entire apartment building involves taking out a new loan to pay off the current mortgage on the property. This can be done for a variety of reasons, such as securing a lower interest rate, changing the loan term, converting from an adjustable-rate to a fixed-rate loan, or accessing equity in the property. Here’s a general outline of how to refinance an entire apartment building:

Evaluate the reason for refinancing: Before proceeding, determine why you want to refinance. Are you aiming for a lower interest rate, better loan terms, or extracting equity to fund renovations or other investments?

Check current loan terms: Some existing loans may have prepayment penalties. It’s crucial to understand these and any other terms that could influence the decision or timing to refinance.

Property assessment: Get a current valuation of the apartment building. Lenders will base the loan amount on the property’s current value, so having an up-to-date assessment is vital.

Research lenders: Not every lender is interested in or has favourable terms for commercial property refinancing. It’s worth approaching both your current lender and others to compare terms. Consider using a commercial mortgage broker who has experience with apartment buildings and can connect you to appropriate lenders.

Prepare documentation: Lenders will want to see a variety of documents, including current rent rolls, profit and loss statements, property management contracts, and maintenance records. They’ll also look at the building’s occupancy rates, the creditworthiness of tenants, and the building’s condition.

Loan application: Once you have chosen a lender and have all the required documents, submit your application. The lender will review your application, the property details, your creditworthiness, and any other pertinent information to make a decision.

Property inspection and appraisal: The lender will likely require a professional appraisal of the property to confirm its value. They might also inspect the building to assess its condition and verify information provided.

Loan approval: If the lender is satisfied with the application, appraisal, and any other requirements, they will offer loan terms for the refinancing. Review these terms carefully and ensure they meet your needs and expectations.

Closing: After agreeing to the loan terms, the refinancing process will conclude with a closing, similar to the initial loan’s closing. The new loan will pay off the existing mortgage, and any additional funds (if you’re cashing out equity) will be disbursed.

Ongoing management: With the new loan in place, ensure you understand and manage the repayment terms, interest rates, and any other responsibilities associated with the refinanced loan.

Refinancing an entire apartment building is a significant financial decision. It’s essential to consult with financial professionals, including commercial mortgage brokers and financial advisors, to ensure the refinancing meets your objectives and is financially advantageous.

How can I remortgage?

Remortgaging a high-rise flat in the UK involves a process similar to obtaining the initial mortgage but with specific considerations due to the nature of high-rise properties. Here’s how you can go about it:

Determine your reasons: Understand why you want to remortgage. Common reasons include getting a better interest rate, releasing equity, or switching from an adjustable-rate to a fixed-rate mortgage.

Review current mortgage: Before proceeding, check the terms of your current mortgage. There may be exit fees or early repayment charges if you decide to switch before the end of a fixed-rate period.

Property valuation: Obtain an up-to-date valuation of your high-rise flat. This valuation will influence how much you can borrow and the terms you’ll be offered.

Research lenders: While you can approach your current lender for a remortgage deal, it’s wise to shop around. Different lenders might offer better terms, especially if your financial situation has improved or if property values have risen.

Consider a mortgage broker: Given the unique considerations with high-rise flats, using a mortgage broker can be beneficial. They can guide you to lenders familiar with high-rise properties, potentially offering better terms or more flexibility.

Prepare documentation: As with any mortgage application, you’ll need to provide evidence of income, current property value, and other financial details. Given the unique nature of high-rise flats, lenders might also request additional information, like details about the building’s maintenance, any service charges, or ground rent.

Apply: Once you’ve chosen a lender and prepared all necessary documents, submit your application.

Property assessment: Lenders might want to assess the property’s condition. This is especially true for high-rise flats, given concerns around building safety and regulations. Post-Grenfell, lenders may require an EWS1 form (External Wall System form) to ensure the building’s cladding meets fire safety standards.

Loan approval: If the lender is satisfied with your application and the property assessment, they’ll offer terms for the remortgage. Review these terms carefully before agreeing.

Completion: Once agreed, the new mortgage will pay off the existing one, with any additional funds (if you’re releasing equity) disbursed to you.

Stay informed: After remortgaging, keep informed about market interest rates and any changes in regulations related to high-rise flats. This ensures you remain in the best position with your mortgage in the future.

Remortgaging a high-rise flat comes with its set of challenges, but with careful planning and the right advice, the process can be smooth and beneficial. Always consider seeking advice from mortgage professionals who understand the nuances of high-rise properties in the UK.

How do EWS1 forms impact mortgage applications for high rise flats?

The EWS1 form, or External Wall System form, was introduced following the Grenfell Tower tragedy in the UK to ensure the cladding and external wall systems of buildings meet fire safety standards. Its introduction has had a significant impact on mortgage applications for high-rise flats.

For many lenders, the EWS1 form has become a crucial requirement when considering mortgage applications for flats in high-rise buildings. If a building hasn’t been assessed or fails to meet the required safety standards, it can be challenging for potential buyers or current owners looking to remortgage to secure a loan. This is because lenders are concerned about the potential risk associated with the property, both in terms of safety and the potential for decreased property values.

For those looking to purchase a flat in a high-rise building, it’s advisable to check if an EWS1 form has been obtained and what the results of any assessments were. Without a valid EWS1 form confirming the building’s safety, potential buyers might find their mortgage application declined, or they may face delays until the required assessment is conducted.

Current owners of flats in buildings that haven’t been assessed or that fail assessments could face a double challenge. Not only might they find it difficult to sell their property, but they might also encounter challenges if trying to remortgage.

In essence, the EWS1 form has become a pivotal document in the mortgage application process for high-rise flats, with lenders, surveyors, and valuers all considering its implications when determining the viability and value of a property. The form’s introduction underscores the broader industry emphasis on building safety and ensuring that tragic events like Grenfell are not repeated.

Can I secure a 100% mortgage?

Securing a 100% mortgage, meaning borrowing the entire property value without a deposit, is generally quite challenging in the UK, especially for high-rise flats. Historically, 100% mortgages were more common, but after the financial crisis of 2008, lenders became more cautious, and such products became rare.

For high-rise flats, lenders often have stricter criteria due to perceived higher risks associated with this type of property. Issues like building safety concerns, cladding problems post-Grenfell, and the complexities of leasehold arrangements can make lenders more cautious.

While a few lenders might offer 100% mortgages under specific circumstances or schemes, they might not extend these offers to high-rise flats. Additionally, if they do, the interest rates could be much higher, reflecting the higher perceived risk.

One potential avenue for securing a high loan-to-value (LTV) mortgage is through a guarantor mortgage. In such arrangements, a family member or close friend guarantees the loan, meaning they agree to cover the repayments if you can’t. Some guarantor mortgages might offer higher LTV ratios, potentially up to 100%. However, this puts the guarantor’s assets, often their own home, at risk if repayments aren’t met.

If you are considering a high LTV or 100% mortgage for a high-rise flat, it’s essential to consult with a mortgage broker. They can provide guidance on available products, potential risks, and how to navigate the application process.

Are there any government schemes or support for first-time buyers of high rise flats?

Yes, the UK government has introduced various schemes over the years to support first-time buyers, and many of these can be used for purchasing high-rise flats. Here are some of the prominent schemes:

Shared ownership: With this scheme, buyers can purchase a share of a property, typically between 25% and 75%, and pay rent on the remaining share. Over time, buyers can increase their share through ‘staircasing’ until they own 100% of the property. This scheme is often available for flats, including those in high-rise buildings.

Lifetime ISA: This savings account allows first-time buyers to save for a property. The government adds a 25% bonus to the savings, up to a set limit, which can be used towards buying a first home.

First homes: Introduced more recently, the First Homes scheme offers newly built homes at a discount for local first-time buyers, key workers, and other priority groups.

It’s essential for potential buyers to ensure that the specific high-rise flat they’re interested in is eligible for their chosen scheme. Some schemes might have restrictions based on property type, location, or price.

Additionally, while these are UK-wide schemes, Scotland, Wales, and Northern Ireland might have separate or additional programs tailored to their regions. It’s advisable for first-time buyers to consult with mortgage brokers or advisers familiar with government schemes to understand their options and eligibility.


Can you get a mortgage on a building with cladding?

Yes, you can get a mortgage on a building with cladding, but it’s more challenging. Following the Grenfell Tower tragedy, lenders have become cautious about properties with certain types of cladding due to safety concerns. To determine the safety of the cladding, many lenders require an EWS1 form (External Wall System form). This form certifies that the external wall system, including cladding, has been inspected and meets fire safety standards. If a building doesn’t have this form or fails the assessment, it can be difficult for potential buyers or current owners to secure a mortgage.

How do ground rents affect mortgages for high rise flats?

Ground rent is a regular payment made by the owner of a leasehold property to the freeholder. Some leasehold agreements, especially in high-rise flats, have ground rents that can escalate significantly over time. Lenders examine the ground rent terms when considering a mortgage application. If the ground rent is considered onerous (for example, doubling every 10 years), it might affect the property’s value and future saleability. As a result, some lenders might decline a mortgage application or offer less favourable terms. It’s essential to review the lease agreement to understand ground rent terms before applying for a mortgage.

How do service charges impact mortgage eligibility for high rise flats?

Service charges are fees paid by flat owners for the maintenance of common parts of the building or estate, like lifts, hallways, or gardens. These charges can be variable, and in some luxury high-rise developments, they can be quite substantial. Lenders take service charges into account as they form a regular financial commitment for the borrower. If service charges are high, they could affect the affordability calculations made by the lender, potentially reducing the amount they’re willing to lend or influencing the mortgage’s terms. It’s crucial for potential buyers to be aware of service charges and factor them into their financial planning when seeking a mortgage.

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