Bridging loan for lease extension - yes/no?

trex227

tonyh66 said:

£16.5k off £400k is nothing, I think your getting bad advice. A FTB looking at a £400k house/flat won't be put off if the lease is only 79 years its longer than their lifetime, the pending work by the freeholder may have an effect on the sale, and will also have to be factored into te selling price.

If the lease is not getting extended upon purchase buyers may not be able to get a mortgage on the property- lenders start getting twitchy about lending when leases are less than 80 years

trex227

Start the process of extending the lease and assign this to the buyers. I’m pretty sure you won’t need to pay the £16.5k, just the legal costs associated with starting the lease extension. I know in the past lenders were happy to lend to buyers where the lease extension would be completed upon completion of the buyers purchase (though whether that’s changed with changes to the mortgage market I don’t know).

http://lease-extensions.org.uk/assign-benefit-notice

What are the major works? Have you had any offers?

[Deleted User]

j_jaxx said:

Thanks @Lover_of_Lycra. Which lenders do you think are worth approaching? Who might lend when I'm newly self-employed. Loan would be repaid early when flat sells. 

Not a clue.  Several years ago Nationwide gave me a personal loan a couple of months after I went from PAYE to contracting but I'd had an account with them since I was 8 and I'm not sure that information helps you.

ARH_2

A slight simplification, but here's the gist:

1.You advertise the property as 'a new 99 year lease will be provided on completion'. Your asking price reflects the value of the propetery with the long lease. 

2. On exchange day the buyer includes the condition that the extended lease is to be provided on completion. Your solicitor uses part of the exchange deposit to purchase the lease extension, effective from completion day, on your behalf. 

3. On completion day the buyer gets the flat with a shiny new lease and you get the sale price less the cost of the lease extension.

First step, talk to your solicitor as it's a marginally more complicated transaction than usual, but not that unusual.  If you're buying at the same time and need to hand the whole exchange deposit on it becomes more tricky.