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Its Complicated

Bought a first property (leasehold flat in block of 4) in 2002 on 100% Mortgage 7 years remaining. Property has been subjected to number of subsidence claims unbeknown to me Lease started in 1974 (my paperwork stated 99 years from 2002). Due to low lease 49 years unable to remortgage. To renew lease been quoted £24,880 plus legal fees. Outstanding mortgage is at £150k. Reluctant to invest more into a distressed property and have been trying for quick sale but no offers and likely negative equity. My question is should not be able to sell within 7 years would my existing home be at risk even though with different lender? I'm currently up to date with all payments but Halifax (rental property) refusing to to assist with rate (on SVR 8.74%) as not buy to let mortgage and on interest only. Any constructive advice greatly appreciated. Been a stressful property for all of my adult life.

Comments

  • pinkshoes
    pinkshoes Posts: 20,006
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    I'm a bit confused.

    1. If your paperwork states 99 years from 2002, then surely it will have 70 years left on the lease, not 49? Regardless, it is normal that properties with less than 80 years on the lease are not mortgageable and the shorter the lease gets, the more it costs to extend.

    2. If you took out a 100% mortgage, are you saying this was an interest only mortgage, hence you still owe £150k? Usually, if you take out an interest only mortgage, you must have some sort of plan in place to pay it off? If not, you will need to sell.

    Your best bet is probably to list it at auction making it clear it will need a cash buyer. How much did you pay for the property and how much do you think it is worth now?


    Should've = Should HAVE (not 'of')
    Would've = Would HAVE (not 'of')

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  • JM68
    JM68 Posts: 76
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    There could be variations due to either mortgage terms of lender policy, but usually what would happen is at the end of the mortgage period you would need to find the money to settle the balance on the mortgage (150k) or sell the property to do so.  If you could not then they would likely seek sale of the property and costs, and if the sum raised was less than the money owed they would seek to enforce the balance of the debt against you.  There are many ways to do that, which could include seeking to put a charge of your other property and, potentially, forcing a sale of it.  However, it could be that you agree payment terms of some sort for any balance owing.  Do you know what the full market value of the rental property is, if it had a long lease?  Have any others sold in recent years despite the subsidence issues?
  • If you bought in 2002, was a new lease drawn up at that time? Or did you just buy by way of a transfer from the previous leaseholder? That would explain the discrepancy on the length of time left.

    What paperwork do you have that states that you purchased with 99 years left on the lease?  
    🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
    Balance as at 01/09/23 = £115,000.00
    Balance as at 31/12/23 = £112,000.00
    SOA CALCULATOR (for DFW newbies): SOA Calculator
    she/her
  • Thanks for replies. It has been valued at £250,000 with full lease but despite it being large ground floor flat in desirable location I think that is unlikely. My copy of form from Land Registry states 99 years from 1st November 2002 but I have been advised this could be typo? 
  • Following on from previous comment. 3 of 4 flats have short leases same as mine but other 2 are mortgage free. Flat above has extended lease but was unable to sell at auction although not sure why. Not sure if means anything but of the 4 I have largest and bet laid out flat
  • No new lease drawn up. Just original one from 1974 but not in my name, I just have docs from Land Registry. Not that excuses it but bought when early 20s so didn't know of issues.
  • No - the 1974 lease wouldn't be in your name - that's standard. 

    I think in your shoes my first step would be to check what documents the Land Registry have on the property - and also, do you still have a file of correspondence etc from when you bought the property (no shade on you if you don't - it would be a long while to keep it and I will cheerfully acknowledge that most folk might not!) - if you do, go through that and see what was reported to you on the length of lease remaining, and also what might have been reported to your lender - as if it HAD been 99 years from 1974 frankly I'm surprised that was mortgageable. 
    🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
    Balance as at 01/09/23 = £115,000.00
    Balance as at 31/12/23 = £112,000.00
    SOA CALCULATOR (for DFW newbies): SOA Calculator
    she/her
  • Thanks. It was filed at Land Registry from 2002 but Freeholder subsequently had it amended with Land Registry but I wasn't informed. I'll go through files and see what I have. My main thing is should I be looking to raise £25K to extend lease just to remortgage and take away threat of 100% mortgage expiring in 7 years. Or try sell at a loss and raise the money to pay shortfall to Halifax. At moment due to high rate I'm losing money each month. Halifax won't change rate as said previously 
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