Block of flats / Over-exposed / Lender decline

Lender: “We’re overexposed and we can’t lend you anything”.
Borrower: “You’re WHAT?”

The challenge

When you’re buying a new build flat in blocks of 6 or more, always be mindful of ‘exposure risk’.

This is more problematic when you get to larger blocks of flats.

Our client was buying a flat in a block of 200 flats.

What is an ‘exposure risk?. It’s when a lender can only lend on a finite amount of flats in the block they can lend on, irrespective of who is borrowing the money.

Some have a maximum number, and many more have a percentage of flats in a block they will go to before they will decline every other mortgage above this.

The solution

To find out which lenders will lend in a particular block is not a straightforward or quick exercise. A huge amount of time is spent talking to the estate agents and valuers, as well as lenders to deduce how much exposure they have in a block. You then need a lender who is ok with the individual circumstances of the borrower in order to get the mortgage lending required.

In this particular example, having spent dozens of hours researching a lender who could support the application, we found one who could.

After thought

A broker’s work doesn’t start at the application. This is a great example where a huge amount of hours is spent before any application is submitted to a lender. However, it’s the work we do in advance of this which ensures the greatest chance of success for you, the borrower, and our client.

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David was absolutely amazing, from helping us find the right mortgage, to advising us, to being on hand for silly questions we had. Nothing was too much trouble for him. I will absolutely be recommending him to our friends.

Frederica Turner