mortgage overpayment vs extending lease

sab8878

Hi there
Hoping someone can help with my dilemma. Basically I have a £163000 tracker mortgage (currently 1.75%). However the flat has a 78 year lease so its over the crucial 80 years point.

I would like to know what I should do. Should I overpay on my mortgage. I could probably afford £500 per month which I reckon would take around 10 years off the length of my mortgage if I continued until the end. Or do I save up for the roughly £10,000 it will cost me to extend the lease by another 99 years.

I am looking to sell within the next two years so would appreciate any advice

Thanks

Radiantsoul

How much would extending the lease add to the value of the property?

sab8878

not sure to be honest. It is probably worth around £200,000 now and i would hazard a guess that it would add possibly £20,000 but in the current market that could be wrong.

Robert_Sterling_3

As a rule of thumb together with un educated guess I would say this:-

When a lease is extended it clearly benefits the owner of the lease at the expense of the owner of the freehold.
They might decide to share the spoils.
e.g. If the value of the lease hold property goes up £20,000 then the occupier pays £10,000.

There might also be an increase in the ground rent to be taken into consideration.

techno12

sab8878 wrote: »

Hi there
Hoping someone can help with my dilemma. Basically I have a £163000 tracker mortgage (currently 1.75%). However the flat has a 78 year lease so its over the crucial 80 years point.

I would like to know what I should do. Should I overpay on my mortgage. I could probably afford £500 per month which I reckon would take around 10 years off the length of my mortgage if I continued until the end. Or do I save up for the roughly £10,000 it will cost me to extend the lease by another 99 years.

I am looking to sell within the next two years so would appreciate any advice

Thanks

78 years, you're ok I think. Mine has 68 years and I was told that it only becomes a problem when it gets below 60 (ie term of mortgage + 30 years was the formula my advisor used, anything below that and the new buyer won't be able to get a mortgage on it).

I'm waiting for prices to bottom out before looking into extending - I think the cost of the extension is somehow linked to the market value, but every year that creeps by adds to the cost of the extension. If I had £10k now I'd probably extend now to be honest..