Is it difficult to get a mortgage on a studio flat?

Brodel

Hi,

I am looking to purchase a studio flat that is below 30 sq m in SW London. I'm in the fortunate position to be a cash buyer and have put an offer in on a place recently. The estate agent seems to think I have a good chance and mentioned the other person interested in the flat may have difficulty getting a mortgage on the property.

I wasn't aware of this until having a quick look online and seeing that it's supposedly difficult to get a mortgage on a studio property. I am a bit concerned now as to whether or not I will have trouble selling on the property should I want to in the future.

I am going to call my bank this morning and get their opinion on the situation but I would like to hear a few other peoples thoughts too. Is this something that may change over the next few years, or are studio flats below 30 sq m something that I should steer clear of?

Thanks for any replies

PasturesNew

I've not heard that before. I converted it to sq ft (as I understand those) and it's 323 sq feet - which is quite a good/large size.

Maybe the agent really meant there were other issues, such as a short lease, or absent freeholder, or it's on a high up floor of an ex-council block ... or, he could have just been making up anything to be able to say something rather than nothing.

Brodel

PasturesNew wrote: »

I've not heard that before. I converted it to sq ft (as I understand those) and it's 323 sq feet - which is quite a good/large size.

Maybe the agent really meant there were other issues, such as a short lease, or absent freeholder, or it's on a high up floor of an ex-council block ... or, he could have just been making up anything to be able to say something rather than nothing.

Thanks for the fast reply. As far as I'm aware there aren't any other issues, it's a 1st floor flat in a Victorian conversion and the lease was renewed a couple of years ago (still need to clarify whether it was for an extra 99 or 125 years). She just mentioned that they have found lenders to be a bit reluctant to lend on similar properties but didn't say why.

AlexMac

News to me too. But maybe worth asking a couple of lenders, as policies differ. For example I was considering a late 19th century house with an original flat roof... to find that my preferred lender (I think the Nationwide) didn't advance mortgages on homes with predominantly flat roofs? But my bank (Natwest) said no such problem; Or was it the other way round? Anyway, I would check a couple.

Brodel

Thanks for the suggestion. I plan on calling a couple of lenders at lunch if I have time, so I'll see what they have to say.

100saving

Studios below 30 SQ. meters are hard to get mortgages on as I have found out. I had to drop out of buying a very good studio in TW1 due to the flat being 28 SQ.

Its not impossible to get mortgages on this type of property but some lenders won't go near them. The best bet is to talk to a mortgage broker. some factors the lenders look at is the location of the flat. if its a 25 SQ. meter studio down oxford street they will most likely lend on it but if its in wales they might not. (mean no harm to wales)

Brodel

Thanks again for the reply. The flat is on a quiet residential street in SW2, personally I can't see any problems with the location but the estate agent did say that they didn't think the other potential buyer would get the mortgage.

I don't really know how big a warning this should be and whether or not I should retract my offer and look for something else. I'm just not sure I can afford anything larger, especially not in that area...but I don't want to have a lot of difficulty selling it in the future.

dominoman

I would have thought 30 m2 in SW2 would be OK. But speak to a couple of mortgage brokers if you want to know.

In any case I presume you are BTL and planning to do it for the rental yield?

Brodel

dominoman wrote: »

I would have thought 30 m2 in SW2 would be OK. But speak to a couple of mortgage brokers if you want to know.

In any case I presume you are BTL and planning to do it for the rental yield?

I am BTL, yea. I'm assuming there will be a point in the future where I will want to sell though.

I've just had a message left asking me to call the estate agents back to hear if my offer was accepted or not. I know I can still back out, but I feel like I should have a better idea of how resell-able the property will be in the future. I only found out about the possible mortgage difficulties last night.

Brodel

My offer was accepted today and I have the day off work tomorrow so am going to try and investigate more. If anyone has any solicitors they'd recommend in the SW London area then that would be great. I already have a quote from Gregsons in Wimbledon.

Snakey

I'm a recent buyer (although I didn't get a studio in the end) and my mortgage broker said that a lot of banks did have issues with lending on studios, and that it did depend on size - the bigger the place, the less twitchy they would be.

On the bright side: a) it's not that there's anything wrong with studios per se, it's just the perceived difficulty of selling it which gives them the problem as traditionally you only have a very small group of potential buyers - so in central London you are still OK because the demographic is so different what with corporate apartments, holiday/investment flats, Mon-Fri City workers, a thriving rental market and the fact that a lot of people who would have preferred a one-bed just can't afford it; and b) it's only some lenders - I recall it would have reduced my pool of options somewhat but not to the point where it would have been difficult to borrow at all.

The other thing that always improves people's chances of getting a loan is the size of the deposit, and so given that you'll probably end up selling to a BTL landlord or a rich person looking for a pied a terre then there's a reasonable chance your purchaser will not have any problem.

If I were you I would speak to a mortgage broker who is local to the specific area.