Can I do equity release on a leasehold property?

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You can get equity release on a leasehold property, but like any other financial product, a lender will want to make sure you meet some key criteria first.

What is a leasehold property?
In England, leasehold properties include most apartments and many new homes. This means that you only have ownership of the property for a certain amount of time. During the time that you live in the property, you have a lease with the landlord or freeholder. When the lease is up, the property goes back to the freeholder. If you don’t follow the rules of the lease, you could be taken to court and told to pay for any damage.

Most of the time, your landlord will pay for the insurance of the building, which will be included in the service charge.

What information will an equity release lender require about your leasehold property?
Your lender will want to understand how long you have left on your lease, how much ground rent or service charges cost, and if there are any “sell-on” clauses connected to the property. This happens because the lender will want to know that they can sell the home when your equity release term is over. Also, they will probably hire a surveyor to check the property’s value and condition. Lenders will also look at your lease to make sure that the ground rent charges meet their requirements.

What leasehold property criteria can I expect equity release lenders to have?
Different equity release lenders will have different minimum lease terms, which can be anywhere from 75 to over 100 years. In some cases, the lease term will be longer for younger customers. For example, people aged 55 to 60 who want a lifetime mortgage on a leasehold property will have to sign a lease for 125 years.

You can get equity release on a retirement flat, but there might not be as many lenders who do this. So, you should talk to a qualified equity release specialist who can help you find the right product.

This is also true for ex-council flats and other properties that used to be owned by the government.

What can the released funds be used for?
Some people may choose to pay to extend their lease with the tax-free cash they get from their leasehold property. If this is the case, you will need to apply for equity release and a lease extension at the same time. Once the lease extension has been approved, only then can equity be released. In some cases, getting an extension can take up to six months, so you should start the process early.

In the same way, some people may decide to use the money from their leasehold property to buy the freehold or a share of the freehold.

Our equity release specialists are happy to answer your questions. Contact us for a friendly conversation and a quick look at what you need.

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