The number of years left on your lease can make a big difference when it comes to remortgaging your flat.
In this article, specialist Leasehold Property Solicitor, Richard Ramshaw, explains how your lease length can affect your remortgage options, what to do if your lease is too short, and how upcoming leasehold reforms might influence your decision.
Do I need to extend my lease to remortgage?
If you are planning to remortgage your flat, one of the first things you need to check is how many years are left on the lease.
If your lease has fewer than 90 years remaining, many lenders will ask you to extend the lease before they offer a new mortgage. Some may even refuse to lend at all on short leases.
Related article: Why you need to extend your lease and how to go about it
What happens if I don’t extend my lease before remortgaging?
If your lease is too short, your remortgage application may be declined. That doesn’t necessarily mean you won’t be able to remortgage your flat.
We recommend that you discuss this with your lender or mortgage broker who may be able to find alternative lending options if you cannot extend your lease.
How does extending my lease impact my property’s value and remortgage options?
A lease extension can significantly increase your property’s market value. Properties with longer leases are often more appealing to buyers and mortgage lenders. The lease will remain with its current owner until it reverts back to the landlord.
Having a longer lease will give a lender more security making it easier to remortgage and giving you more choice.
Can I remortgage with a lease which has less than 80 years?
Whilst it is still possible to remortgage your flat with a lease that has less than 80 years, most lenders will require at least 90 years.
Some specialist lenders may still consider your application, but you’ll likely face fewer choices and less favorable terms. We recommend that you consider extending your lease which has a term of less than 90 years before applying to remortgage your flat.
You can find out more about our lease extension services here or speak to a member of the team on 01202 499255.
How many years need to be left on a lease to get a mortgage?
Generally, most mortgage lenders will require 90 years or more to be able to mortgage a property. But this can differ depending which lender you choose so it’s best to find this information out first.
Can I remortgage if my lease extension is in progress?
Yes, you can remortgage a leasehold property while your lease extension is ongoing, but it depends on the lender.
You must tell your lender that you are in the process of extending your lease as it will strengthen their security in the property.
Some lenders will require you to complete the lease extension before, or alongside your remortgage.
How do I extend my lease for remortgage?
To start a lease extension, your first step is to contact your freeholder and ask whether they are willing to extend your lease and whether they would like to take the statutory or non-statutory route.
The next step is to contact one of our leasehold specialists on 01202 499255, who would be happy to discuss this further with you.
You can read my colleague’s article on the basics of leasehold extensions here.
How long does a lease extension take before remortgage?
If the freeholder is cooperative, your lease extension can be completed in as little as 8-10 weeks, although if they are not, it can take between 6 and 9 months.
What about the current reforms?
On Friday, 24th May 2024, the Leasehold & Freehold Reform Bill received Royal Assent and became law. This legislation contains the following potential benefits to leaseholders :-
- Marriage value is essentially abolished, making such transactions cheaper for leaseholders who have less than 80 years remaining on their lease;
- Entitling leaseholders to an additional 990 years, instead of just an additional 90 years under current legislation; and
- Removing a leaseholders’ automatic liability to pay the freeholder’s legal and valuation fees (in most circumstances).
Whilst the legislation has received Royal Assent, the Act has not ‘commenced’ under the usual Parliamentary procedures and it is anticipated that this may not take place until 2026, but it could still take longer.
As a result, it is not possible to serve a statutory Notice to force a lease extension with the above benefits until the Act has commenced. We do not have a timeframe at present, which means lease extensions are continuing to proceed under the current legislation.
Whilst there could be benefits to leaseholders in waiting for the Act to commence, most people looking to remortgage are under strict timeframes and are unable to wait. However, this will depend on each individual leaseholder’s circumstances.
Specialist Leasehold Extension solicitors
“If you own a leasehold flat with less than 90 years and are due to remortgage, we suggest that you speak to us to see what your options are.”
Richard Ramshaw continues
“Depending on how cooperative your freeholder is will depend on which option you will take, but it is always worth contacting your freeholder first to see what terms they are willing to offer.”
Our bright team of specialists are experienced in dealing with the lease extension process from start to finish. Please don’t hesitate to contact us on 01202 499255 if you have any questions or are looking to extend your lease.
We offer all new clients a free initial chat, were you will get to meet the team and discuss your option, get in touch by filling in the form to book yours.
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