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Home Loans on Properties in Flood Risk Areas

Living in a flood risk is perhaps more common than you think since several are dotted throughout the UK! Revolution Finance Brokers has compiled this guide to explain all the important facts about mortgages in flood risk zones.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-07-17
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Home Loans on Properties in Flood Risk Areas

Certain areas of the UK are considered at higher risk of flooding. Therefore it can be harder to mortgage a property in these regions, with lenders being reluctant to lend when they perceive the property as risky.

In this guide, we'll explain what to do if your home purchase falls into this category, and how to improve your chances of mortgage approval.

For professional assistance with securing a mortgage on a home in a flood risk area, contact Revolution Brokers on 0330 304 3040, or email us at [email protected].

Will UK Lenders Offer a Mortgage Against Property in a Flood Zone?

There are always mortgage options, and a lot depends on how significant the flood risk is. Many lenders will offer to lend but might require you to have sufficient insurance or a higher deposit value.

Much depends on the lender and their policies.

Revolution Brokers works with a vast network of lenders who can mortgage properties in most scenarios and work with you to minimise your property's risk.

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What is Flood Insurance and Why Do I Need it for my Mortgage?

The key factor for a lender is the risk. If your property is in a flood zone in category two or three, most mortgage providers will stipulate that you need to have adequate insurance.

Even in low-risk flooding areas, many lenders will require flood insurance before they complete the application process.

This cover mitigates the risk factor and lowers the chance that your property will be flooded, and the home will drop in value, or that you will need to sell at under market value if you cannot afford the repairs.

Flood insurance is not a legal requirement, so there can be mortgage options from more flexible lenders who do not demand this. However, it is always wise to seek professional advice before deciding not to insure against a significant risk.

How Do I Know if my Property is in a Flood Zone?

Generally, flooding risks are low - but this can change quickly with heavy rainfall. Around two million British properties are in flood plains, so this could apply if your town or city is near to the coast, or a river, for example.

There are also many properties in cities and towns that are considered at higher risk. This scenario usually occurs due to outdated drainage systems that may not cope in heavy rains.

Is Flood Damage Insurance Expensive?

Most insurance providers will offer flood damage cover within a buildings insurance policy. As an average, it usually costs somewhere around £4,000 to repair a property following flooding. There is a much greater average cost of £180,000 to rebuild properties that have been destroyed by floodwaters.

The average insurance cost is around £120 per year, which is much more affordable for most people than taking the risk. However, premiums will vary significantly between properties and regions.

To take out flood insurance, you will usually need to be over 18, a UK citizen, and own the property.

Flood insurance usually covers:

  • Clearance and cleaning work.
  • Legal and survey fees.
  • Replacing damaged furnishings.
  • Temporary accommodation.
  • Drying out the property.

Note that buildings insurance does not cover contents, so it is worth thinking about a separate contents insurance policy if you are buying a property in a flood zone.

Is Flood Insurance Required on Existing Mortgages in High-Risk Areas?

It is recommended, since even though your mortgage provider might not have required you to have flood insurance, this may well be a clause within the lending contract.

Should your property become flooded, and you don't have a policy to cover the repair work costs, you might find yourself in breach of your mortgage contract, and your home could be repossessed.

Do I Still Need Flood Insurance on a Second Mortgage?

Typically yes - if you already have buildings insurance coverage for flooding damage on your primary mortgage, and take out a second charge, you probably won't need a second insurance policy on the same property.

However, if you buy a second home, you will need to insure it to the same extent, as you would have for a first home.

How Can I Mitigate the Flood Risk to my Property?

There is a service called Know Your Flood Risk, which provides reports to assess your property's risk.

The service carries a small fee and is useful for property buyers and homeowners to understand whether they are in a flood zone, and what extent of cover is required.

When purchasing a new property, it is crucial to determine whether it is at risk of flooding before beginning the mortgage application process.

Professional Advice on Insurance and Mortgages for Properties in Flood Areas

Business finance broker works with clients across the UK, recommending the financial products that will enable you to purchase your property, without extensive risk to either you or your mortgage provider.

For more help with mortgages for flood zones, contact the team on 0330 304 3040, or drop us a message at [email protected] to arrange a good time to talk.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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