Purchasing a property with a short lease can be problematic and finding the right lender is key. As such, we have relationships with lenders who offer bespoke products for those looking to purchase a short-lease property, and funding is available on lease lengths as low as 9 years and even beyond, as long as it is a qualifying lease, (i.e. able to be extended beyond 21 years). Presently there are some highly competitive products available whether the property is for use as a main residence or an investment property. Lending can also be obtained through a range of structures including limited companies and offshore trusts.
The short lease mortgage is a favourite of financially astute borrowers and can be a cost-effective way to buy properties in some of London’s most desirable locations.
A lease under 80 years is considered a short lease. It can cause problems when applying for a mortgage as providers usually only lend on properties with leases above 80 years or above, however speaking to an experienced independent short lease mortgage broker will pay dividends.
Short lease mortgages are quite a misunderstood area of finance. Many mortgage brokers think that any property with a lease with less than 70 years remaining is not possible to get a mortgage on, however, the reality is that it is possible to get a short lease mortgage with as little as 10 years remaining. We have in the past been able to get a mortgage with only 8 years remaining. It is worth getting expert advice.
Ownership on a leasehold basis gives a right to an occupation and the use of a flat for a lengthy period – that is, the term of the lease. Many flats on new developments are for 999 years. And those bought from the council under the Right to Buy scheme would be for 125 years. Many others are for 99 years. If the lease is above 90 years then it is acceptable to almost all lenders. The shorter the lease the less options available.
As a general rule of thumb, if the lease is less than 90 years you should almost certainly try to extend it as properties with shorter leases are less valuable than ones with long leases (this is particularly true if leases are below 80 years) this is due to the costs involved in renewing short lease properties.
Yes it is possible to get a mortgage on a leasehold property but as a general rule it is much harder to do so if there are less than 70 years remaining on the lease. If you have less than 60 years remaining there are fewer mortgage providers will be willing to lend but it is possible.
Yes. Sometimes when the lease runs very low the best option is to obtain a bridging loan to release the funds needed to renew the lease. The property can then be remortgaged or sold with the new lease in place.
Short lease properties are very tempting to many buyers and property investors due to the substantial discount available. It is important to do all your calculations to fully understand all the costs involved before embarking on purchasing a short lease property.
We have a range of calculators to help make things simpler for you, from calculating payments to understanding how much your stamp duty may be. These calculators are for guidance purposes only.