Studio flats
Are you looking to buy a studio flat but feeling unsure about your mortgage options?
Well, look no further! This article is here to provide you with expert advice on unlocking mortgage options for studio flats.
In the bustling urban landscapes of the UK, compact living spaces, and studio flats, have become increasingly popular.
While these smaller properties, especially those under 30 square metres, offer unique living experiences, they also come with their own set of challenges when it comes to securing a mortgage. If you’re considering such a property, it’s essential to understand the potential issues that could crop up.
The lender’s point of view
When it comes to smaller properties, lenders often tread with caution.
Their primary concern?
The return of their money! Lenders want assurance that if they ever need to repossess and resell the property, they can do so without incurring losses.
Additionally, if you’re planning to rent out the property, lenders want to ensure that the rental income will cover the mortgage repayments. Given these concerns, many lenders have set minimum size requirements for properties, with some even avoiding studio flats entirely.
Most lenders require a minimum size of 30 square metres, with some setting their limit at 50 square metres.
However, with the right approach and understanding, it’s possible to find lenders willing to consider valuer recommendations and offer mortgages for a broader range of properties.
Mortgage Options for Small Properties
Whether you’re eyeing a cosy studio for personal use or as an investment, there are mortgage options available.
Both residential and buy-to-let mortgages are possibilities for these properties. However, be prepared for potentially higher interest rates due to the associated risks. With diligent research and the right advice, securing a favourable deal is within reach.
The Role of a Mortgage Broker
Finding the best mortgage for smaller properties can be a tad overwhelming.
This is where a good independent mortgage broker can be invaluable. With their expertise and industry connections, brokers can guide you toward lenders more open to financing compact properties.
They can also help you avoid potential pitfalls, ensuring that your credit report remains untarnished and increasing your chances of a successful application.
Remember, the right broker can make all the difference in turning your property dreams into reality.
Is there a minimum size for a flat?
Yes, there is a minimum size for new homes in the UK.
The UK government has set out minimum space standards for new homes, known as the “Nationally Described Space Standard.” Introduced in 2015, these standards specify minimum gross internal floor areas (GIA) and storage for different types of homes based on the number of bedrooms and occupants.
For example:
- A one-bedroom, one-person flat should have a minimum of 37 square metres.
- A one-bedroom, two-person flat should have a minimum of 50 square metres.
- A two-bedroom, three-person home should have a minimum of 61 square metres.
- A three-bedroom, four-person home should have a minimum of 74 square metres.
These standards also provide guidelines for room sizes, storage space, and other aspects to ensure that new homes offer adequate living space.
It’s essential to note that while these standards exist, not all local authorities have adopted them, so there can be variations depending on the region.
This is because it is not mandatory for local authorities to adopt the rules!
Here are some reasons why not all properties are included:
Local Autonomy: The UK government allows local councils to decide whether to adopt the standards based on their specific housing needs and market conditions. Some councils might feel that the standards aren’t necessary or suitable for their area.
Existing Properties: The standards primarily apply to new developments. Many existing properties, especially older ones, might not meet these standards but are still habitable and in demand, especially in areas with historical buildings.
Affordability Concerns: In areas with high land prices, enforcing minimum space standards could potentially increase the cost of housing. Some councils might be reluctant to adopt the standards fearing it could exacerbate affordability issues.
Flexibility for Developers: Some local authorities might want to offer more flexibility to developers, especially in urban areas where space is at a premium. They might believe that allowing smaller units can increase the overall housing supply and provide more affordable options for residents.
Differing Priorities: Local councils might have other housing priorities, such as increasing the overall number of affordable homes, improving energy efficiency, or promoting sustainable development. In such cases, space standards might not be their primary focus.
Eligibility and Requirements
Your eligibility for a mortgage hinges on two main factors:
- specific details of the property
- your own financial standing
Some lenders might classify compact properties as ‘non-standard’, which could mean a higher deposit requirement. This could mean at least 25% of the property’s value.
Additionally, your income plays a pivotal role. While many lenders offer mortgages up to 4.5 times your salary, this multiplier might be lower for properties at 30 square metres.
In addition to the specifics of the property, standard mortgage eligibility factors come into play:
Employment Details: If a significant portion of your income comes from freelance work, bonuses, or commissions, especially if you’re self-employed, expert guidance is invaluable.
Age Considerations: Some lenders might be hesitant if the mortgage duration extends into your retirement period.
Credit History: If your credit history isn’t spotless, don’t be disheartened. While adverse credit might pose challenges, it doesn’t rule out the possibility of securing a mortgage. Partnering with a mortgage broker will give you access to specialist lenders.
Final Thoughts
While securing a mortgage for a studio flat, or compact property, might seem like hard work, with the right guidance and preparation, it’s entirely achievable. Always remember to seek expert advice tailored to your situation. After all, every property journey is unique, and with the right steps, you can make yours a successful one.
