Flying Freehold Mortgage
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Mike Haupt – Mortgage Adviser
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Flying Freehold Mortgage
Mike Haupt explains how to go about getting a mortgage on a flying freehold property.
What is flying freehold?
This applies when part of the property with the flying freehold either overhangs or lies beneath another person’s property. The property doesn’t need to be floating in midair for it to be deemed a flying freehold.
To give you a couple of examples, you might have a semi-detached or a terraced house where the dividing line between the two properties is not straight down the middle. It might be a zigzag.
Perhaps you have a balcony overhanging next door’s property, or you have a basement or cellar, although where I live in Wiltshire, that’s not a typical one. – if your basement runs other properties, that’s still a flying freehold. Equally, there might be rooms above a shared passageway.
With new build properties you might get driveways or entrances that go underneath another house. In some maisonettes, part of the property is situated under or over another freehold property.
Can I get a mortgage for a property with a flying freehold?
Yes, is the short answer. Flying freehold properties can represent some legal issues and some challenges, but in theory there are still plenty of options and lenders are usually happy to lend on them.
They’re mainly dealt with on a case-by-case basis, depending on the individual property. Some lenders might limit a percentage of the total floor space for the flying freehold. It might be 10%, 15% or 20%, for example. As long as the flying freehold part of the property is under this percentage, we’ll be absolutely fine.
However, on the flip side, some lenders just don’t have an appetite for certain things. That might well be the case with a flying freehold, but there are still plenty of lenders that will accept it.
What if I’m a First Time Buyer? Can I get a flying freehold mortgage?
It won’t have an impact on the property side. If you’re a First Time Buyer looking to buy a property with a flying freehold, there are two things that we need to look at.
One is your individual situation – your income, credit score and deposit, to make sure you match all the criteria needed. Then we just need to have a look at the property and make sure that the flying freehold element of the property will match up with the lender we’re looking to use.
You won’t get penalised for being a First Time Buyer when it comes to looking at a flying freehold.
What if I have bad credit? Can I get a mortgage on a flying freehold property?
Yes, in theory. The flying freehold element is a separate issue. We need to understand what that bad credit is. Are we talking bankruptcies, IVAs, CCJs, defaults, late payments or missed payments?
We need to understand how that affects your individual criteria, income commitments and what you’re looking to borrow. We make sure we’ve got all the affordability bit sorted.
We then look at the property element – it’s almost secondary. So based on your individual criteria, we’ll see which lenders we’re looking at do or don’t lend on flying freehold. So it’s a two-stage process to get both elements right – the bad credit side and the property side.
Can I get a flying freehold mortgage if I’m self-employed?
Yes – it’s almost like a repeat of the last two questions. It would be very much a two stage process. We’d absolutely work with you as a customer and we’d go through all the different criteria.
We would check the self-employed element and make sure we can find a lender for you. Then we’d double check against their property criteria to make sure that they will accept that property. If they won’t, we’ll find another lender.
Are there any issues when remortgaging a flying freehold property?
No, not necessarily. It might come back to what I said earlier about percentage limits for the flying freehold. Each lender will have a slightly different criteria around that. Some might not set a limit at all, while others have more restrictions. We would just do our research and just make sure we know the options.
Can I get a Buy to Let mortgage on a flying freehold property?
Yes, absolutely. We will make sure you hit all of the Buy to Let criteria, which means that you have a 25% deposit and the affordability is there. Then we would just look through the opportunities with different lenders.
Multiple lenders would look at lending on flying freehold property. It would just be a case of getting the right one for your circumstances.
Do I need indemnity insurance to get a mortgage on a flying freehold property?
Potentially yes. It will be lender dependent. The conveyancer doing all the legal work for you with the house purchase or remortgage will guide you on this bit.
If you do need to have an indemnity insurance policy in place, it’s typically between £100 and £200 – it’s not hugely costly.
Does It Cost For An Initial Chat?
Please don’t be afraid to pick up the telephone. Contact us with any questions or any conversations you want to have. There’s no commitment, there’s no silly questions. I’m here to try and help put your mind at ease, so let’s have a conversation and answer your questions.
Will conveyancing take longer on a flying freehold?
Not necessarily, but I’m not going to promise that. With a flying freehold or non-standard construction, more complexity can sometimes mean things take longer.
But if your conveyancer is good at what they do and they were aware very early on, they should be able to get things through in the same timescales.
Could anything else affect my chances of getting a mortgage for a flying freehold?
No, the main issue comes from that percentage amount of floorspace and whether that meets the lender’s criteria.
The other thing that will happen when you buy a property is that the lender may send a valuer out. They then have the ability to decide that, although it is within the floorspace criteria, they don’t have an appetite for lending on this property. It’s not right for them.
We would talk that through with the individual. One thing I always do when looking to submit an application to a lender is to pick up the phone and just run through the property details with them. We get a really good understanding of where their criteria is to make sure nothing obvious will trip us up.
Have you secured many mortgages for clients on a flying freehold?
I have. I’m fortunate enough to be 15 years into mortgages now. I’ve dealt with a fair few of these in my time. The vast majority of flying freeholds are on newer properties. I’ve got experience there and can talk to all of the different challenges that we’d face.
I actually haven’t done a mortgage for a property with a basement that goes under someone else’s property. I’m looking forward to that – it’s quite a unique one. It’s interesting because there’s nothing that suggests it’s flying, yet that’s what the terminology says.
How early should I speak to a broker like Tomorrow mortgages about this type of property?
Preparation is key. One of the first things you should do when you’re starting to look at buying a property or thinking of remortgaging is start talking to a mortgage advisor like us at Tomorrow Mortgages. We can make sure we’ve got everything lined up within the lender research and criteria so when it comes to the point of finding that property, you can go ahead.
A phone call to someone like us should be one of the first things you consider doing. My job is then to support you through that whole journey, from finding a property or remortgaging all the way through to completion and beyond.
What’s the difference between using a mortgage broker and going straight to your bank for a mortgage on a flying freehold?
I work with more than 90 different lenders and I’ve got a huge amount of knowledge on them. I can go from one bank to the next to find the right option for you.
Now, you could absolutely walk into your bank on the high street or pick up the telephone to them. They might say yes, they can help you. But if they say no, what’s your next port of call? Are you going to walk around to every bank? How do you know you’re getting the best interest rate for your situation?
I can tell you which banks will lend on a flying freehold, and which have the lowest rates for your circumstances. My loyalty lies with you as the client, not to the bank. That’s the advantage of using a broker.
Your home may be repossessed if you do not keep up with your mortgage repayments.
You may have to pay an early repayment charge to your existing lender if you remortgage.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
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Because we play by the book we want to tell you that…
- Your home may be repossessed if you do not keep up repayments on your mortgage.
- There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
- The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.