Most lenders insist that a term of at least 35 years must exist on a lease in addition to the required mortgage term. Therefore, if a borrower requests a 25 year mortgage term the remaining lease term must be at least 60 years. If the remaining lease term is shorter, the lease will need to be extended to make the property mortgageable. The process of extending a lease can also add significant value to a property. Todays good news it that the cost of lease extension is now far easier to calculate.
How much does it cost to extend a residential lease?
Until now this hasn’t been easy to work out. However, Brethertons solicitors, has simplified matters significantly by adding a residential Lease Extension Calculator to its website. The lease extension calculator allows leaseholders to estimate the premium which may be charged for extending the term of their lease by 90 years. Best of all, it’s free to use!
A lease grants the leaseholder the right to occupy the property for the term stated in the lease, the freeholder owns the building, the leaseholders owns a right to occupy space within the building for an agreed term. The term of the lease decreases so at some point the lease will become so short that a lender will not provide a mortgage to allow someone to purchase the property. Surprisingly, this could be with as little as 70 years unexpired. In this situation the lease must be extended and to do so a premium is paid to the freeholder.
Enfranchisement solicitor Roger Hardwick told us: “An enormous amount of effort has been put into our lease extension calculator and I am delighted with the result. It provides leaseholders and landlords alike with a quick and easy method of estimating the value of a lease extension. Our calculator can make extremely detailed assessments by altering the deferment rate. This is something not usually seen in other lease extension calculators. “
Roger continued “The Brethertons Lease Extension Calculator is an easy-to-use application, which allows the leaseholder to quickly and simply estimate the premium payable for an extension. We continually strive to improve the service we provide to our clients and this is another clear demonstration the firm’s continuing commitment to progress and innovation.”
We have included the Brethertons Lease Extension Premium Calculator to the Legal section of our website in order provide yet another useful free tool for our subscribers. You can try it for yourself by clicking HERE