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If you own a leasehold flat, how many years are left on the lease can affect which lenders will consider your remortgage, on top of anything on your credit file. Many lenders set their own minimum number of years that must remain, both when you apply and by the end of the mortgage term, and this varies from lender to lender. Ground rent, service charges and the wording of the lease itself also come into the picture. Checking these early, alongside your credit history, gives you a clearer sense of your options before you apply.
What does leasehold mean?
With a leasehold flat, you own the right to live in the property for a fixed number of years set out in the lease, rather than owning the building or the land it stands on outright. The freeholder (sometimes called the landlord) owns the building, and the lease is a contract between you and them. Most flats in England and Wales are leasehold, while houses are more often freehold. When the lease eventually runs out, ownership of the property would revert to the freeholder unless the lease has been extended before then, which is one reason lenders pay attention to how long is left.
Why does lease length matter to a lender?
A mortgage is secured against the property for the length of the mortgage term, often 25 to 35 years. If a lease has relatively few years left, a lender may be concerned that the security behind the loan will be worth less by the end of the term, or that the property will be harder to sell on. Because of this, many lenders will only lend where a set number of years remains on the lease after the mortgage is due to be repaid. Exactly how many years each lender wants is a matter for that lender, and it is not the same everywhere, so it is worth checking rather than assuming.
What counts as a short lease?
There is no single legal definition of a “short” lease for mortgage purposes. What one lender treats as short, another may be comfortable with, and this can also depend on the rest of your application, including your credit history. Rather than relying on a fixed number, it is more useful to think of lease length as a sliding scale: the fewer years remaining, the smaller the pool of lenders likely to be interested, and the more it is worth speaking to a broker or adviser who works with leasehold properties regularly.
Ground rent and service charges
Alongside the lease term itself, lenders and surveyors also look at:
| Factor | Why it matters to a lender |
|---|---|
| Years remaining on the lease | Many lenders want enough term left to outlast the mortgage; how much is set by each lender |
| Ground rent | High or fast-rising ground rent can affect affordability and how a lender views the lease |
| Service charge | Counted as an outgoing alongside your mortgage payment in the affordability assessment |
| Lease restrictions | Clauses on subletting, alterations or pets can affect how some lenders view the property |
| Building and freeholder information | Some lenders ask about the managing agent, building insurance and any major works planned |
Your solicitor will usually request a copy of the lease and a management pack from the freeholder or managing agent as part of the legal work on a remortgage, which is where most of this detail comes from.
Extending your lease before you remortgage
Extending a lease adds years back onto it, which can support the property’s value and widen the choice of lenders. It has its own cost and timescale, though, and is a separate legal process from the remortgage itself, distinct from the costs of the remortgage itself such as valuation and legal fees. There has been reform in England and Wales aimed at making lease extensions more straightforward, so it is worth checking the current position on gov.uk and speaking to a solicitor who specialises in leasehold work before deciding whether to extend first or remortgage first.
Remortgaging a leasehold flat with adverse credit
A short lease and adverse credit both narrow the field of lenders on their own, and having both together narrows it further, so it usually pays to plan ahead rather than apply speculatively. A few things can help:
- Check your lease length and your credit file at the same time. Knowing both figures before you approach a lender means you are not caught out partway through an application.
- Consider a product transfer first. If your current lender already holds a mortgage on the property, a product transfer keeps the same lender and the same lease arrangement, and does not need a full affordability reassessment where you are not borrowing more.
- Speak to a specialist adviser. Someone who regularly places both leasehold cases and adverse credit cases will know which lenders are realistic for your combination of circumstances, rather than you approaching lenders one by one.
- Get free debt advice if you are struggling. If missed payments or a CCJ have come from wider financial difficulty rather than a one-off event, MoneyHelper and StepChange offer free, impartial guidance before you take on more borrowing.
None of this guarantees a particular lender will say yes, but going in with accurate information about your lease and your credit file, rather than guessing, puts you in a stronger position either way. If your circumstances also involve a low credit score more generally, our guide to that situation covers the wider picture alongside this one.
Frequently asked questions
Can you remortgage a flat with a short lease?
It can be harder, but it is not automatically ruled out. Fewer lenders will consider a short lease, and the number willing to lend often falls as the years remaining get lower. A specialist adviser who knows the leasehold market can tell you which lenders may still be an option for your specific lease length.
Does a short lease affect the value of a flat?
It can. Surveyors and lenders often value a flat with a short lease more cautiously than one with a long lease, since the property becomes less valuable as the lease runs down unless it is extended. This is one reason lenders look closely at years remaining when they assess a leasehold remortgage.
Do you need the freeholder’s permission to remortgage a leasehold flat?
You do not usually need permission to remortgage, since you already hold the lease. Your solicitor will still check the lease terms and may need information from the freeholder or managing agent, such as confirmation of ground rent and service charges, as part of the legal work.
Is it worth extending the lease before you remortgage?
It depends on your lease length, cost and timescale. A longer lease can open up more lenders and support the property’s value, but extending a lease takes time and involves its own costs. A conveyancing solicitor or leasehold specialist can advise on whether it makes sense before or after your remortgage.