How Can You Get a Mortgage on a Freehold Flat?

Answered on 26 March 2024 by

My partner and I want to get a freehold flat mortgage. The property we want to purchase is a freehold flat in an old building with 4 other flats. There’s no management company in place on the building. Do lenders offer mortgages on freehold flats? What are our options?

Sophie Waugh

Getting a Freehold Flat Mortgage with No Management Company in Place

If you're having difficulty finding a lender willing to finance a freehold flat in a building without a management company, there are a few potential options you could explore:

  1. Specialist Mortgage Lenders for Freehold Flats
    • Some lenders specialise in niche mortgage products, including financing for unique or unconventional properties. Consider reaching out to specialist mortgage lenders or mortgage brokers such as John Charcol who have experience with freehold flats in buildings without management companies. A mortgage broker like John Charcol will be able to find lenders with more flexibility in their lending criteria that would be willing to consider your situation
  2. Bespoke Mortgage Solutions
    • In some cases, lenders may offer bespoke mortgage solutions tailored to specific circumstances. Be prepared to provide detailed information about the property, your financial circumstances, and your plans for managing the property
  3. Private Financing
    • You could explore private financing options. This could involve seeking a loan from private investors, family members, or friends who are willing to lend you the funds needed to purchase the property. Private financing arrangements may offer more flexibility in terms of the property's unique characteristics and your financial situation
  4. Property Development Finance and Loans
    • If you're open to making renovations or improvements to the property, you could explore property development finance options. Some lenders offer specialised financing for property development projects, including the conversion or refurbishment of existing buildings. You could use this financing to purchase the property and potentially establish a management company or undertake necessary upgrades to meet lender requirements
  5. Legal Advice and Structuring
    • Consult with solicitors or legal advisors who specialise in property law to explore alternative legal structures for the property ownership. They may be able to offer insights into potential solutions or alternative arrangements that could address lenders' concerns and facilitate financing for the purchase of the freehold flat
  6. Property Valuation and Due Diligence
    • Ensure that you have a thorough understanding of the property's value, condition, and legal status. Commission a professional property valuation and conduct comprehensive due diligence to identify any potential issues or obstacles that may affect financing. Providing detailed information and documentation to lenders can help demonstrate the viability and security of the investment

As it can be challenging to secure a mortgage on a freehold flat, you may want to consider a bridging loan.

Bridging Loans as an Alternative

Bridging loans are a short term funding option typically used by property buyers to “bridge” the gap when buying a new property and waiting for a traditional mortgage to be approved or capital to be released from the sale of their current home. Typically, you'd need to have the loan for 6 months, and then once the management company and leasehold is in place, you could look to remortgage to a standard lender as the exit strategy.

Find Out More About Freehold Flat Mortgage Options

It's essential to explore all available options and seek professional advice from mortgage brokers like John Charcol who have experience with unique property transactions. We can help you navigate the process, identify potential solutions, and find the best financing option for your specific circumstances. Contact us on 0330 433 2927.

For more information about the difference between freehold and leasehold properties please read our Freehold and Leasehold guide.

Ask The Mortgage Experts answers are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them. We recommend you seek professional advice with regard to any of these topics where appropriate.