short lease and no ££

partialycloudy

Hi all,

Just looking for some advice really.
My husband and I purchased a flat in 2007 for £155K using a 100% mortgage. The lease at time of the purchase was about 63 years.
I will admit we were a bit nieve about the whole lease situation and we were more excited about moving into our own place together.
Now 5 years later, the lease is 5years shorter and we want to move so we can start a family.
Our last mortgage statement showed the outstanding mortgage at £145k, and we had the flat valued in 2010 at abut £160k.
An online calculator suggests the extenstion of the lease could cost £25k!!!! We simply dont have it.
Our mortage company went into nationalisation shortly after we moved in so they will not be lending any more money. We are on an amazing rate at the moment so don't really want to re-mortgage with another company, we are overpaying at the moment and probably wouldnt be able to do this on a higher rate.
We have come up with the following ideas:
-Put it on the market as is and see if someone just as nieve as us comes along!
-Sell it at auction, probably just breaking even and then rent to save up for a deposit to buy again.

Does anyone, with more knowledge in these things, have any miracle ideas....Please?!

seven-day-weekend

I would first of all ask your freeholder how much exactly the lease extension will be.

Tixy

When the flat was valued at £160k in 2010 - was this valued with the knowledge of the lease length?

You need to find out how much the lease extension will cost first - whether you sell privately or at auction any buyer would expect to be informed of that figure.

partialycloudy

Yes the EA knew about the lease length.

PasturesNew

You need to find out exactly how much it'd cost .... and you need to find the money from somewhere.... because every day that you leave it, it'll cost more and nobody will be able to buy it from you anyway (except at a knock down price as it'll be cash buyers only).

So, somehow, you have to either save or earn that money soonest.... which might mean staying in with the lights out for 3-4 years and both doing a 2nd job.

Richard_Webster

When you bought, your solicitor did advise you that you would have pay a large sum to obtain a lease extension when you wanted to sell, didn't he?

If he didn't then claim against him for negligence!

princeofpounds

You are close to negative equity most likely. The flat won't be worth 160k any more as the value of the leasehold continues to depreciate.

As a result, selling might not work because your mortgage company might not permit it without you covering their loan. It will be close but you can give it a try if you want. Few banks will now mortgage your property so finding a buyer might be tough.

I see you are overpaying your mortgage. This is good, it might just have kept your head above water. But it should probably be diverted to a lease extension. You need to do the maths - either you save money at the rate of your mortgage (not very high by the sounds of it) or you save it at the rate your lease extension increases in cost at (I can't tell you where you are now, but it accelerates as the lease shortens). 'Save' at the higher rate.

Also, go to lease-advice.org for more information. Online calculators are very rough, particularly for shorter leases.

partialycloudy

Richard_Webster wrote: »

When you bought, your solicitor did advise you that you would have pay a large sum to obtain a lease extension when you wanted to sell, didn't he?

If he didn't then claim against him for negligence!

Our solictor was particulaly rubbish and unprofessional, but I do remember him making a comment like " a lease extenstion could cost anything from 5k to 25K" but didn't obvioulsy tell us the exact amount....we kind of thought maybe 8-10 if we were unlucky!
I really don't understand how we can be charged 25k for a bit paper, then pay £50 a year for nothing! Oh and when we purchased the flat we were told if we did extend then the ground rent would go up to £250 a year.

partialycloudy

"Also, go to lease-advice.org for more information. Online calculators are very rough, particularly for shorter leases."

I know the calculators will only let me calculate it on the basis of 60years.

fannyanna

partialycloudy wrote: »

we had the flat valued in 2010 at abut £160k.

How many estate agents did you have out to value the property? How much have similar properties in your area sold for?

I'm always a bit surprised when people say they can make a profit on a property bought in 2007 (at the height of the market). Some people can but most (including myself) can't.

You need to be wary of the old estate agent trick of overvaluing a property to get business.

partialycloudy

We had three and they all came in with the same price. We live in quite a "nice" area where the values managed to stay up, thankfully!
I wary that the 160k could be with the lease extended...but hubby is adamant they said without the lease.