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Mortgage Advisor & Director
Multi-unit freehold blocks (MUFBs) are properties that contain a cluster of separate, independent residential units held under a single freehold title.
These properties can offer enhanced security of income and healthy rental yields for landlords, but what kind of mortgages are available? Find out here.
What is a multi-unit freehold block (MUFB) mortgage?
A multi-unit freehold block mortgage is a type of mortgage landlords can use to purchase multiple residential units housed on the same site under a single agreement.
These units will each have their own assured shorthold tenancy (AST) agreements in place, as well as private areas with personal space for each resident, separate entrances for every household in the building, and may have common areas for all residents to share.
In other words, a multi-unit freehold block mortgage is a specialist type of buy-to-let mortgage for buying properties that fit the MUFB criteria. Examples of these include:
- A entire block of flats
- Properties that have been converted into multiple flats
- Multiple houses on the same site under a single freehold
MUFB mortgages have several advantages for landlords but they can be complex to arrange - seeking professional advice from the right mortgage broker is highly recommended.
Lending criteria for MUFB mortgages
Lenders who offer MUFB agreements have strict criteria for these properties. There are requirements that the property and the applicant need to meet, and they are as follows:
- Number of properties on the same title: Most lenders will allow you to have 6-10 properties on the same freehold, but a few will go up to 30 or more.
- Unit size: Some lenders have minimum size requirements for each unit on your freehold, measured in square metres. It can be anywhere between 6 and 40 sqm, but some mortgage providers have no minimum floorspace requirements at all.
- Time remaining on lease: Some providers will only offer a multi-unit freehold block mortgage if there are at least 100 years remaining on the lease.
- Deposit requirements: You will typically need 20-25% of the MUFB’s combined value to put down as a deposit (75-80% LTV), but some lenders may accept less.
- Landlord experience: As MUFBs are more specialist and can be higher risk, some lenders will only offer them to experienced landlords, but a few consider first-timers.
- Construction type: Your choice of lenders will be slimmer if the property has any no-standard construction - read more in our standalone guide on this topic.
- Other requirements: A strong application in general will help your cause, so having clean credit, being under 75 during the mortgage term and having adequate proof of rental income will improve your chances of securing a mortgage on an MUFB.
How to get a multi-unit freehold block mortgage
For a mortgage type as specialist as this, we recommend beginning the process by talking to a broker with specific knowledge of multi-unit freehold block mortgages.
At Teito, we have buy-to-let mortgage brokers on our team who specialise in MUFB properties. They arrange mortgages for these properties every day and can offer you bespoke advice. They will guide you through the steps below to full application:
- Obtaining a rental income projection and rental yield forecast
- Putting together a business plan (if necessary)
- Finding the ideal lender and deal for you
- Recommending multi-property insurance plans
On Teito, you can book a free, no-obligation chat with one of our brokers, or compare the latest MUFB mortgage rates for free. Choose your preferred option below to get started:
Get tailored mortgage advice for MUFB properties
Which mortgage lenders are available?
Multi-unit freehold block mortgages are largely offered by specialist buy-to-let lenders. Below you will find examples of these provides along with some of the specific criteria:
- Bath Building Society: Offers multi-unit freehold block mortgages as part of its HMO range of products.
- Vida Homeloans: Will consider this property type if no leases have been granted on any of the units.
- Kensington Mortgages: Will offer multi-unit freehold block mortgages as long as the property is not located in Northern Ireland.
- Landbay: Reserves the best deals for multi-unit freehold block mortgages for landlords with at least 12 months experience.
- Kent Reliance: Will lend on these properties as long as there are no more than 10 flats under one freehold.
These are merely a handful of the lenders available - speak to one of our brokers for a full breakdown of your options and advice on which one to choose.
How much can you borrow?
You will typically be able to borrow 75-85% of the combined value of all of the properties on the single lease, but affordability will also be tied to the rental potential of the MUFB. Lenders will need to see that the forecast rental income across each unit will be at least 125-145% of the monthly mortgage payments to satisfy their affordability checks.
How much will your repayments be?
You can use our calculator below to get an idea of how much your multi-unit freehold block mortgage will cost each month and overall. Enter the total amount you are borrowing into our calculator below and this tool will return some quick results for you.
This calculator has been set to interest only with an example rate of 5% to reflect a typical MUFB mortgage, but these values can be changed manually.
Are the rates higher for multi-unit freehold block mortgages?
They can be higher than they are for standard buy-to-let mortgages, but not necessarily a lot higher. With a healthy amount of deposit, landlord experience and a property that fits the standard criteria for MUFB mortgages, it is possible to get a similar rate to a standard BTL.
Why choose Teito for your multi-unit freehold block mortgage?
On Teito, you can compare the latest buy-to-let mortgage rates for free and get expert advice from a broker who specialises in multi-unit freehold block mortgages.
Here are just some of the reasons people choose us for their mortgage needs:
- You can access the latest buy-to-let mortgage rates in seconds
- Our brokers specialise in MUFB mortgages can can secure exclusive deals
- We are 5-star rated on leading review services
- You can secure an agreement in principle in minutes
Ready to compare the latest rates and take advantage of a free, no-obligation chat with a broker who specialise in multi-unit freehold block mortgages? Get started here.
FAQs
The main difference between MUFBs and houses of multiple occupancy (HMOs) is that each unit is self-contained, with its own entrance and individual AST, whereas, with an HMO property, there are shared facilities such as kitchens and bathrooms. Although it may sound more complicated to manage multiple ASTs as opposed to one, these types of properties are generally more profitable, so for many landlords, the additional effort proves worthwhile.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.