advice on what option to take

Yorkie1

I think it depends from lender to lender. If you don't get a specific answer to this question on this thread, it might be worth posting it on the mortgages board.

want2bmortgage3

I will look into the lease, I've already read some of it and realised that I have a parking space I never knew about LOL.

I posted in this part of the forum as my original question was more related to buying / renting, but replies have led me down the mortgage/lease route.

Still none the wiser whether to rent or take the plunge and buy another place!

tim123456789

want2bmortgage3 wrote: »

Is there a definite cut off point when I couldn't get a re-mortgage?

.

The number of lenders goes down at 70 years and almost disappears completely at 60.

Of course the ones that are left are only going to be the fringe lenders who will charge more, so only the really desperate will use them.

You lose twice letting the lease get too short. Once because the value will be reduced by the cost of the new lease and twice because only cash buyers (who will be savvy buyers looking for a bargain, not people who have "fallen in love" prepared to pay over the odds) will be able to buy.


tim

want2bmortgage3

thanks Tim, bit extreme, but what if I managed to pay off the mortgage within 7 years and owned it outright? Then wouldn't need a mortgage and could just rent it out?
Is that an option do you think?
Or if I managed to bring it down to 20k for example, could I get funds elsewhere, eg a loan to pay off the mortgage?

tim123456789

want2bmortgage3 wrote: »

thanks Tim, bit extreme, but what if I managed to pay off the mortgage within 7 years and owned it outright? Then wouldn't need a mortgage and could just rent it out?
Is that an option do you think?
Or if I managed to bring it down to 20k for example, could I get funds elsewhere, eg a loan to pay off the mortgage?

I don't understand what it is you are trying to achieve.

Your best move (financially) is to proceed with a lease extension and borrow the money to pay for it. (Though you will need to take better advice on the reasonableness of the charge than you will get here).

This will increase the value of the property making a higher mortgage theoretically possible.

Whether you can actually do this will, of course, depend upon your salary being sufficient and the new mortgage meeting the bank's LTV requirement, which may be stricter than when you took out the initial one.

All this, paying down the current mortgage, moving out and renting it, bla bla bla, does nothing to address the basic problem.

want2bmortgage3

Hi Tim
What I'm suggesting is that I wouldnt' need to renew the lease if I somehow paid off the mortgage within 7 years?
I could then just let the lease run down, as by the time it runs out I probably wont be here! And just have the rent money as income all this time.
Extreme I know, but is it possible?

want2bmortgage3

I have been reading the guide to extending your lease.

One of the first things I notice is it says the freeholder is usually responsible for buildings insurance.

However when I got the mortgage it said a condition of the mortgage was I had to obtain my own buildings insurance.

Does this make sense? Surely each flat owner shouldnt need a separate policy each for the same 2 storey block?

I am also reading that by extending by 90 years the ground rent would be reduced to barely nothing, however the quote I got a year or so ago tells me the ground rent will increase to £250 from £35 and will double every 10 years.

This whole thing appears like a big scam and I am thinking of selling the poxy flat.

Yorkie1

want2bmortgage3 wrote: »

Hi Tim
What I'm suggesting is that I wouldnt' need to renew the lease if I somehow paid off the mortgage within 7 years?
I could then just let the lease run down, as by the time it runs out I probably wont be here! And just have the rent money as income all this time.
Extreme I know, but is it possible?

But you are talking of selling it in the future - you clearly don't plan to own it until you die. Nobody except cash buyers will be able to buy it because they can't get a mortgage, and even those won't want to if it doesn't work out financially.

Ignore the buildings insurance issue for now; you are complicating things too much.

Either way, you have already let the lease get too short. Concentrate on that as a priority.

Edit: I believe you have already had advice further up the thread about the ground rent issue.

Are you looking on the LEASE website for information too?

want2bmortgage3

I have done some more research. The quote from my freeholder appears to be rather unreasonable:

1. Their quote is only to renew the lease back to 99 years. If I went through the 1993 ACT it would be 67+90=157 years

2. They want increased ground rent £250 a year doubling every 20 years. through the ACT it would be 0.

3. They are quoting on the basis of doing it in-house @ £950 and saying if I serve notice under the ACT then they will be charging at least £1800 for the legal and valuation costs.

want2bmortgage3

Just a question, how am I supposed to know how much the propery is worth right now, with the lower lease? In trying to work out the renewal cost I need to know its worth now and its worth with a full lease.