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Home » Mortgage FAQs » My property has a short lease, can I still get a mortgage?

For leasehold properties, mostly flats, apartments and maisonettes, a short lease can make finding a mortgage for the property more difficult: a term of less than 60 years is deemed short.  As a rule, shorter leases can negatively affect the value of a property as it may be entirely unmortgagable and therefore can only be purchased in cash.

By law, you are entitled to extend your lease for a further 90 years. In addition to the 90 years, a formal lease extension reduces the ground rent to a ‘peppercorn’ rent, meaning that no ground rent is paid.  To proceed down the formal (also called statutory) route a leaseholder must have been listed at the Land Registry as the registered owner of the property for at least two years. With this route there is no need to seek the consent of the mortgage lender.

Unlike the two-year ownership rule that exists for formal lease extensions, a leaseholder can approach their freeholder for an informal lease extension at any time, but if there is a mortgage over the property, then the leaseholder will need to seek consent from their lender, which incurs additional costs.

The term of the lease will be a factor for lenders considering both mortgage applications (to purchase) and remortgage applications (to borrow more money or move to a new lender offering a lower interest rate).

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