Leasehold Extension And Short Lease Mortgage Issues
Increasing the saleability of your flat can only really be done by getting a lease extension
. Many mortgage lenders will not lend on a short term lease and therefore when it comes to selling it is very important to have as many years remaining as possible.
The issue arises due to the fact that the required length of lease remaining varies from lender to lender.
You should try doing a quick phone around to different high street lenders and find out exactly what the minimum unexpired lease term they would accept in order to lend. The Woolwich will not lend on property with a lease less than 30 years longer than the term of the mortgage ie 55 years on an average 25 year mortgage.
The Halifax stipulates 35 years longer than the mortgage term whereas the Bristol and West offers on 70 year leases. Call up others such as the Bradford & Bingley, Co-op, Prudential, Sainsbury's et al, and create your own table of results.
If your lease is less than 70 years, it is advisable to apply for a leasehold extension before your property goes up for sale.
When an apartment first goes on the market, an estate agent may dismiss the years remaining on the lease as an irrelevance. In your eagerness to sell, you may be tempted to feel cushioned by this approach, and relieved. However, beware: it is unlikely a buyer will overlook this detail. If the lease is approaching the limit of bank lending, they are likely to see a serious issue ahead and back off to calmer waters. This will be down the road, to the alternative dwelling with a longer lease on offer.
Individual cases may of course be considered differently and your personal funds may have some impact on a lender's criteria of judgement. Before proceeding however, this would need specific approval. It would not be wise to go ahead before you thoroughly check the facts and make specific appointments to verify your case.
So, in answer to that oh so common question: 'when is the most appropriate time for a leasehold extension?', the best action to take in to ensure that your flat has enough years remaining on the lease to meet the requirements of the majority of high street lenders, this should increase the sale appeal of the property. These will be the lenders that your prospective buyer will most likely be approaching for a mortgage. And don't forget, if you decide to go ahead with a lease extension, make sure you point a solicitor specialising in this complex area.
The idea is that you want your flat to be open to as many buyers as possible to avoid stress and panic when selling - and therefore, the incorrect decision.
by: Tim Bishop
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