Extending a Short Lease - Is It Worth It? - By: Tim Bishop

Short lease holders and flat hunters looking at getting a short lease will at some point become interested in the benefits of leasehold extension. This article looks that pros and cons of leasehold extension and what process you must follow.

Pros: 

- purchasing a short lease might be cheaper then paying rent in some places

- significant gains can be made on properties with short leases where the cost in extending a lease is known at the time of purchase as well as the value of the property once the lease extension has been completed.

Cons: 

- you must consider the cost of extending a short lease. This can be expensive and the cost to extend the lease is often unknown at the time of purchase the cost of lease extension for a short lease varies widely between properties. This is normally come to by looking at 2 independent surveys provided by both the owner and freeholder.

The good news is that it is a common misconception that properties with short leases are impossible to finance. You may well walk away with that impression after you speak with your bank.

  Take heart: there are a few specialist lenders for short lease mortgages. Extend if you want to, but think about whether you have to? Policies fall roughly into three categories:

- Ultra short lease mortgages: 3 to 25 years at the start of the mortgage term  - up to 70% loan to value. 

Lenders will assess the mortgage based on income. The mortgage is provide on a repayment term basis and this should not be longer than the amount of years remaining on the lease. As long as the lender is happy that the mortgage is affordable and the client has the ability to repay, then a mortgage may be granted

- Short lease mortgages: minimum of 10 years left at the end of the mortgage term  - up to 85% loan to value .

Lending is granted again on the principle that as long as the loan is affordable based on income and repaid with a minimum of 10 years remaining at the end, then the lender is happy to consider applications Short lease mortgages: minimum of 25 years left at the end of the mortgage term 

- up to 85% loan to value. As you can see you have many options. The best thing to do is to find a specialist lease extension solicitor with real experience in the highly technical area of extending a lease. The will have all the relevant knowledge needed to help you extend that short lease.

About the Author

If you're looking for an experienced specialist Lease Extension Solicitor, contact Bonallack and Bishop - solicitors with significant expertise in advising on extending a lease. Tim Bishop is senior partner at the firm, responsible for all major strategic decisions. He has grown the firm by 1000% in 13 years and has strong plans for its continued expansion.

Article Directory Source: http://www.articlerich.com/profile/Tim-Bishop/62652

Additional Articles From - Home | Reference & education | Legal