Refused mortgage due to escalating ground rent

TrickyDicky101

To be honest, I don't think those rises are particularly onerous or unreasonable (especially not compared to some we have seen details of on this forum). Did you engage a broker to source the mortgage for you? If so, what did she say?

karen100

I did yes - they hadn't mentioned any problem with it previously, though i suppose they may not have been aware of it? They are looking for another lender now. My conveyancer thinks its strange that there is a problem with it. Perhaps it is just this particular lender. Its especially strange as the mortgage was agreed some months ago, and this cancellation just came out of the blue.

TrickyDicky101 wrote: »

To be honest, I don't think those rises are particularly onerous or unreasonable (especially not compared to some we have seen details of on this forum). Did you engage a broker to source the mortgage for you? If so, what did she say?

agrinnall

Everybody since post #2 seems to have ignored edddy's analysis of the situation. It's not something that I know about but if it's correct then I can see that the OP would be in for a massive bill at purchase rather than paying ground rent for the time they own the property. I'm not sure why this is an issuer to the mortgage provider unless they either think it makes the property unaffordable for the OP or they might run the risk of picking up the tab themselves if they have to foreclose.

TrickyDicky101

agrinnall wrote: »

Everybody since post #2 seems to have ignored edddy's analysis of the situation. It's not something that I know about but if it's correct then I can see that the OP would be in for a massive bill at purchase rather than paying ground rent for the time they own the property. I'm not sure why this is an issuer to the mortgage provider unless they either think it makes the property unaffordable for the OP or they might run the risk of picking up the tab themselves if they have to foreclose.

Subsequent posters didn't ignore it - they simply interpreted the escalation clause as less significant than eddddy.


Doubling every 20 years is not that bad. Yes it's worse than GR that doesn't escalate and yes you would have to pay the capital value of the future cash flows if you extend the lease under the statutory process. But the cost isn't made up - it relates directly to what those future cash flows are. £700 pa GR after 20 years simply isn't that much (or not as much as others with escalation clauses have reported).
As somebody else mentioned it works out as c.3.5% increase per annum, but after that first 20 years, it isn't even that because it only doubles on each 20 year anniversary.