Remortgaging Advice - Lease

Chooru

Hi there,

I'm just after some advice.

5 years ago, I got a fixed term 5 year mortgage at 2.9%, which ends in January. A few months ago, out of no where, my long term partner of 10 years decided he wanted to break up and sell the flat. I managed to convince him to see the mortgage out, and the drop in flat prices in the area and the buy-out of mortgage fee would actually leave us in debt.

I live 280 miles away from home in Hertfordshire and work as a teacher. I decided to remortgage on my own and my partner has agreed not to take his equity out of the flat and gift it to me (I paid 90% of the deposit). However, the problem I have is to do with my leasehold. It has 82 years left, so I need to extend the lease. The problem is that with the current interest rates and my existing debts (around £7k car finance, plus student loans - my postgraduate loan eating up several hundred pounds a month (which I obviously wouldn't have done if I knew he was going to break up with me!) means I'm only able to borrow around an additional £3000 when mortgaging.

I'm just not sure what to do. If I lose my home, then I'll end up losing my job, since I can't work from home. Mortgage rates are about the same as rental prices, so if I lose my flat now, I'll probably never own property again.

So I guess I have 2 options: take out an additional loan to pay for the lease extension, or just let the lease run below 80 years and hope that the government follow through on their promise to remove marriage value.

I just feel so utterly lost. And it's not as simple as moving back up north. I've built myself up to be an assistant head within a very short space of time at my current school. If I were to move up north, where there are less teaching jobs in my subject area, I'm very unlikely (practically impossible) to enter with my current role and salary.

It's been the worst few months of my life and I thought I was getting through it, until my new mortgage provider valued my property significantly lower than it was worth 5 years ago, meaning I don't have the equity in the property to borrow more.

I could move house, but I don't think this is financially viable at the moment and the drop in property value means I likely won't have enough for a sufficient deposit.

gwynlas

If you have the space then you could rent out a room to help with finances. It might not be what you wish to do but look at it as passive income.

You have 2 years before your lease reaches the critical 80 year length so it gives you a breathing space to consider next moves.

Did you set up a deed of trusy for deposit and subsequent sale indicating share percentages?

ACG

The lease is fine. Some lenders go as low 70 years.

poseidon1

Suggest you read the following article carefully, especially with regard to the 'should I wait or extend now' decision tree -

https://blakessurveyors.com/leasehold-reform/

With the very powerful lobby group of freeholders still appealing against abolition of marriage values through the courts, final enactment of this provision will likely be delayed to 2028 ( or beyond) and possibly coincide with enactment of the new commonhold provisions.

As advised if you have a 2nd bedroom you should seriously consider the rent a room scheme to bump up your income to assist with higher mortgage costs.

The outlook for flat values is not particularly rosy in England & Wales, with a great many simply unable to be sold, so your mention of potentially selling up maybe optimistic at this time.