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LEASE EXTENSION MORTGAGE ISSUES

Lease Extension -Mortgage Guidelines

As specialists in leasehold, one of the most common questions we are asked is "when do I need to do a lease extension". Here we look at a critical factor – mortgage lending requirements.

The remaining length of a lease is often overlooked in the early stage of marketing a flat, estate agents often don’t see it as much of an issue – but buyers do. Especially when the lease is approaching the limit of bank lending.        

Most potential buyers will take out a mortgage to buy your flat, but the required length of a lease varies from lender to lender. Unfortunately it is the individual lender's policy which determines the needed lease length. 

Both banks and building societies all have different policies when it comes to how long your lease needs to be, which makes it difficult to decide when to extend lease. So when asked the question, "What minimum unexpired lease term do you accept", here are the main lender's answers (England and Wales only)

         

Abbey National plc             

          In individual cases our instructions may specifically approve a short lease term. In all other cases our minimum unexpired lease term is 55 years unexpired from completion subject to at least 30 years remaining at the end of the mortgage term. However, if the unexpired term from completion is between 55-70 years and

          (a) this is not mentioned in any valuation report provided to you or

          (b) no valuation report is provided

         

then you should advise us and not proceed further until we have confirmed whether this is acceptable to us.

         

Alliance & Leicester plc     

          A minimum of 50 years at the commencement of the mortgage and at least 35 years at the end.

         

Barclays Bank as The Woolwich             

          Mortgage term plus 25 years

         

Birmingham Midshires      

          Mortgage Term plus 30 years

         

Bradford & Bingley plc      

          The lease must have at least 25 years remaining at the end of the mortgage term

         

Co operative Bank plc        

          Mortgage duration plus 30 years unexpired at end of term.

         

Coventry Building Society             

          Yes. We require a minimum of 70 years unexpired lease.

         

Egg Banking plc      

          50 years

Halifax          

          Mortgage Term plus 30 years.

         

Leeds  Building Society     

          Mortgage term plus 40 years.

 

Lloyds TSB Bank plc (C&G mortgages) 

          Mortgage term plus 25 years subject to an overall minimum term of 60 years

         

Mortgage Express 

          The lease must have at least 25 years remaining at the end of the mortgage term

         

National Westminster Home Loans Ltd             

          Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower.

         

Nationwide Building Society        

          Our minimum unexpired lease term is 55 years subject to at least 30 years remaining at the end of the mortgage term.

          Report to the issuing office if the lease term is shorter than that stated on the offer.

 

Northern Rock plc 

          The Mortgage Term plus 30 years (subject to an absolute minimum lease term of 50 years).

         

Norwich Union Equity Release Ltd          

          145 years minus x

         

Paragon Mortgages Ltd    

          The unexpired term of the lease must have a minimum of 65 years at the commencement of the mortgage term and a minimum unexpired lease term of 40 years must remain at the end of the mortgage term.

         

Prudential Banking plc      

          50 years

         

Sainsburys Bank     

          99 years.

         

The Royal Bank of Scotland plc   

          Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower.

 

Yorkshire Building Society           

          60 years from the date of the mortgage subject to 35 years remaining at the end of the mortgage term.

 

In summary, to make your flat more saleable, ensure that the remaining balance of your lease meets most of the lenders’ mortgage guidelines above – then your flat is available to the largest possible pool of buyers. Otherwise it’s time for a lease extension.

 

John Hemingway

www.LeaseholdDoctors.co.uk/lease.html

 

 

Leasehold Questions?
http://www.LeaseholdDoctors.co.uk

WHAT NEXT?
Call us today on
020 8629 1066 or click here for no-obligation advice on how to increase the value of your flat by extending your lease.

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