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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
0845 259 3059 or
click here for no-obligation advice on how to increase the value of your flat by extending your lease.
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