Why Is It So Difficult To Find A Mortgage For A Studio Flat?

Studio flat buyers always confront issues when they try to get a mortgage. From several to many problems occur due to varied factors. Some people succeed in getting the funds while some do not. If you are also planning to get a studio flat, look at the following situations that hamper your way to a mortgage.

The legal constraint on the size

Studio flats are majorly small, and after a specific extent, they do not come under judicial consideration. The Housing Act does not consider a space less than 10.2 sq m suitable to sleep for two people. This fact puts a constraint on the lenders too, and they hesitate to provide funds on properties smaller than this size.
Your solicitor can bring you the solution to legal issues. He either will tell you to look for a more significant property or will give a workable solution. In most of the cases, the previous one is the only choice. Go for the more substantial size choice.

Not qualifying the studio flat mortgage criteria

If you want to borrow funds to buy a mortgaged property, a set of standards needs to be followed. Rejection or denial of mortgage application happens when the applicant does not qualify on the terms and conditions.

• Proximity to commercial property is a negative factor

If your studio flat is located to near a commercial property, the lender may not want to lend you money. It affects the saleability factor of the property and is considered as risky case in the mortgage market.

• The height of the flat in a multi-storied building

A building with more than seven floors is not a favourable factor in the case of a studio apartment. Maximum 5 storeys are allowed. Also, access to the lift is a significant factor.

Inadequacy of ‘property conversion’ documents

Several studio flats go through the conversion process. It means that previously they were used as a garage or an office block, and then later they get converted in a residential property. It demands a complete and legal process and proper documents and proof.

If the seller is not able to provide you with the actual proof of conversion, you will get stuck between the mortgage processes. The lender cannot compromise on the legalities or authenticity of the property. It has to follow its own rules and regulations of the lending industry.

If you look sound on the part of the property papers to prove the legitimacy of the flat, you may even get a mortgage without deposit in the UK from Mortgage broker such as Shinemortgages.co.uk. It is a standard facility in the UK offered by some lenders.

Mortgage companies prefer larger properties

The lending companies also have their constraints on size. They are not ready to lend money if the flat that applicant wants to borrow money for does not meet the criteria of minimum 30 sq m. Most of the lenders have this condition.

There are not many but several loan companies that may consider your application despite a size lesser than 30 sq m. However, it can be a daunting task to find them. In that case, mortgage brokers can help to ease the struggle. They can see your type of lender from the maze of the abundance of options. John Charcol, ShineMortgages etc. can be the choices to explore or exploit.

Unorthodox income source

It usually happens in the case of self-employed applicants. The lenders have a limited perception of the businesses. If your type of business is out of their understanding, they may not approve you funds. In that case, they also get into doubt about the income part.
Sometimes the type of work is easy to understand for the mortgage company, but on the source of income, chaos may arise. For example - income obtained through paid bonuses does not come under consideration.

Age

Of course, this is something applicable to all types of mortgages. Your age is the first thing to come into the notice of the lender. Minimum age is 21, but that is not a problem. The issue is about the upper age limit.
Some loan providers consider the applicants of up to only 75 and others up to the age of 85. Besides that, the other factors also matter. You may find a finance company that lends money to the people of your age. But some other factor may get into your way.

Suppose you are 76 and earning a fair amount, but the income-to-debt ratio is not good. It is 50:50 then, in that case, the lender gets back on the age factor. Who is going to pay for your instalments if your old debts dominate you at a point where repayments become impossible?

The above factors make the journey to mortgage difficult. But with due and relatable solution, you can create your solution. Work on them and get the property or if possible change the property to meet the lending criteria. All the best!