Yes, it is possible to get equity release on a leasehold property. The lender will need to consider how long you have left on the lease, the cost of any ground rent and service charges and any sell-on clauses.
Different equity release lenders will have different minimum terms of leases that they will accept. This can range from a minimum of 75 years, with some lenders wanting at least 90 or 125 years remaining on the lease. There are new rights coming into force that will allow leases to be extended up to 990 years without having to pay ground rent. There are still other costs to be considered when extending your lease, such as valuation and legal fees.
More2Life will only allow a 100-year lease on their flexi choice products for those aged over 81 years. Those aged between 55 to 60 will need at least 125 years. This minimum lease reduces as the borrower gets older. Those choosing a capital product from More2Life will need at least 175 years on the lease minus the age of the youngest borrower. For example, if the borrower was aged 60, they would need a lease of at least 115 years.
Most Just For You lifetime mortgages require a minimum lease of 120 years. Leases between 100 to 119 years may be subject to a reduction in the available loan to value.
Discover how equity release could improve your retirement finances.
Mortgage Advice Bureau Later Life offers plans from a panel of lenders. It only offers plans that meet the Equity Release Council's standards to give you extra protection.
Speak to an equity release specialist.
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Unless you decide to go ahead, the service is completely free of charge, as the fixed advice fee of £1,295 would only be payable on completion of a plan.
Yes, you can choose to use some of the money from equity release to pay for a lease extension. Your equity release application and lease extension will need to happen at the same time. The equity release lender will need to review and approve the lease extension. The equity release application can only complete once the lease extension is confirmed. A lease extension can take around six months.
Since the Grenfell disaster it has become very difficult to get a mortgage on a property with cladding or combustible materials. Equity release is also a form of lending secured against the property and therefore anything that risks the potential value or saleability of the property will deter lenders from using this as collateral. There is new Government support now being made available to those affected by combustible cladding and this may help to get equity release in the future. A whole of market equity release adviser will know the lenders most likely to accept an application in these circumstances.
You should make sure you can share the following with your equity release adviser:
Yes, it is possible to release equity from leasehold houses. The equity release lender will want to know your ground rent charges and see a copy of your lease agreement.
There are selected lenders that will give equity release against a former local authority property or an ex-council flat. A specialist equity release broker will know the right lenders to talk to.
Yes, there are equity release lenders that will give equity release against a retirement flat, however the number will be limited so an equity release broker can help to save you time finding an equity release lender that will consider these.
Blocks of flats of more than four storeys may need to have a lift to meet the equity release lender’s criteria.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.