Freehold and Lease Extension - Mortage Requirements

Crazyfish25

When I bought my flat 3 years ago it was leasehold however I have since jointly bought the freehold with my neighbour (2 flats in a converted Edwardian property). At the time it was decided to do this as to buy the freehold worked out approx. the same as extending the lease. I am due to re-mortgage and have since being doing some research. Am I still required to extend the lease (approx. 70 years left) and do we need to set up a freehold management company? What do lenders require?

Many thanks

harvey115

I think lenders do not like freehold FLATS, however there may be a solution.

Since the freehold is not solely in your name, you will have to get this into some sort of a management package. You should speak to a broker for this.

kingstreet

You are effectively two legal entities. You are the leaseholder of the flat and a part-owner of the freehold of the building.

Where you deal with mortgage issues, you are the leaseholder and so you need to ensure your lease meets the lender's requirements. Seventy years should be enough for most, if not all, mortgage lenders, so you don't need to worry about extending the lease right now.

Check here for your lender's requirements;-

http://www.cml.org.uk/cml/handbook/englandandwales/question-list/321

For a remortgage, I'm not sure if you'll need to supply accounts for a management company. Might be worth a check with a solicitor.

JPDurand

Since there is an underlying lease, the Lender will be mostly interested in the terms of the lease. As you are the freeholder too, you should be able to amend anything in the lease that the lenders don't like. 70 years is the cut-off for a few banks, so you may be limited in who will mortgage that for you.

Lenders only don't like Freehold flats if there is NO underlying lease. You should be okay.

OBVIOUSLY, the value of the property is influenced by the length of the lease too, so make sure that is not a hindrance when applying.