Buying a Flat as a FTB with 95% Mortgage.... What are the chances of Success?

LittleLost112

Hi, I'm new to this forum and can't quite find the advice I'm looking for.

To cut a long story short, I'm currently in the process of trying to find a property to buy, I live just outside of London so the prices are pretty steep and the most likely option is for me to purchase a flat at around £150k - I have the deposit ready but will need a 95% mortgage - I have a DIP with another lender but that only bases itself on my affordability rather than the property type I'm looking to purchase.

I've seen a caveat on Santanders mortgage calculator stating they 'may require a larger deposit dependant on the type of property, for example, flat or new build...' (well, something to that effect!) even withj them being part of the help to buy scheme (worth noting Nationwide have this type of caveat too).

I've spoken briefly to a mortgage advisor, who has said that a lot of the time Flat purchases require deposits of 20% or more, I've never heard of this issue before and can't find any supporting information to indicate whether it may be a waste of time looking.

Has anyone had experience of trying to buy a flat on a 95% mortgage??

amnblog

We were just discussing such a case today and there are lending options available.


You just need the right broker who knows what they are doing - not the one you are dealing with.

audigex

Flat deposits often require a larger deposit for a few reasons - one being that you usually have a service charge of somewhere between £50 and £200 a month, which naturally impacts your affordability.

Note that the help to buy scheme to a large extent counts as your deposit from the point of view of the lender, as it has the same effect of reducing their risk.

There are other risk factors for the lender, though - flats can fluctuate in value faster than houses: they tend to often be targeted at the lower end of the rental market, which can quickly make the block undesirable to local renters.

Similarly if not properly maintained or the subject of crime. I recently lived in a block of flats which was quite picturesque when I moved in, but several grassed areas were removed and doors replaced by big iron prison-gate effect things, and suddenly I and my £500 pcm weren't interested in living there anymore.

Flats, even more than houses, are susceptible to changes in the area and furnishing/fittings etc. A badly maintained kitchen or bathroom can see the price plummet, and being worth relatively less than houses, a £5k price rise/fall because it needs a new kitchen can be a much larger percentage of the value, requiring a larger deposit.

You can potentially get them on a 95% mortgage, but you'll probably have to call a few brokers and see which seems most enthusiastic (and therefore probably knows a lender who will deal with you)

MillyMolly01

Hi, if it's any help I got a 95% mortgage on a non new build flat last year with Yorkshire Building Society.

Not sure if they took service charges into account of affordability, but I don't remember them doing so.

A quick look at the Accord website (YBS intermediaries service) suggests they do still lend up to 95% on secondhand flats, providing they are not studio flats, or accessed via a covered walkway. More info here: http://www.accordmortgages.com/criteria/index.html

YBS are a picky lender (apparently) but I do have a squeaky clean credit history and was not a first time buyer. Might be worth you speaking to them.

amnblog

LittleLost112 wrote: »

I've spoken briefly to a mortgage advisor, who has said that a lot of the time Flat purchases require deposits of 20% or more, I've never heard of this issue before and can't find any supporting information to indicate whether it may be a waste of time looking.

This is the case for the two Lenders you mention on newly built flats.


Find a broker who knows what they are doing and this will be resolved.

LittleLost112

Thank you above posters, that's a bit more reassuring. I'll have a look at Yorkshire & see what some other advisors have to say. In terms of the affordability, the price tag on the places I want to buy is quite a bit lower compared to the maximum potential mortgage I could get based on my earnings so hopefully that will sway in my favour.

Really appreciate it, thankyou - I won't give up hope just yet...!

amnblog

Use a broker, don't waste time going direct to Lenders.

ACG

I only know of 1 other lenders who would be easier to deal with but more expensive.