Yes, it’s possible to get equity release on a leasehold property.
But lenders will want to know certain things, like how long you’ve got left on your lease. What you tell them will help decide if they can offer you equity release or not.
Equity release explained
If you’re aged 55 or over, equity release is a way of unlocking the money (or equity) tied up in your home. All without having to move.
The type of equity release we offer is known as a lifetime mortgage. It’s a long-term loan secured on your home that’s usually repaid by selling your property after you die, or if you need to go into long-term care, depending on the provider's terms and conditions. Until then, you continue to own your own home and won’t have to move out.
Equity release is a big financial commitment and understanding what it would mean for you is important. It will shrink the amount of inheritance you’re able to leave. It may also affect your tax position and eligibility for certain means-tested benefits. Plus, interest can quickly increase the amount you owe. Lenders usually add interest annually onto both your loan and any interest already added.
The difference between leasehold, freehold and commonhold
If you live in England, Wales or Northern Ireland, most homes are freehold or leasehold. Things are slightly different in Scotland, where almost all properties are freehold. With flats, most are the Scottish equivalent of what’s known as ‘commonhold’ in the rest of the UK.
Freehold means you own your property and the land it sits on for an unlimited amount of time. Leasehold means you only own your home for a limited time, depending on how long your lease is. And you don’t own the land it’s built on. With commonhold, flat owners own the individual freehold of their home for an unlimited amount of time. The shared areas of the building are then owned and managed by a commonhold association made up of these flat owners.
If you’re not sure if your property is freehold, leasehold or commonhold, check your title deeds. You can get a copy of these from land registry if your property is registered with them.
Can you get equity release on a leasehold flat or house?
Leasehold properties can be both flats and houses. Lenders will have different guidelines about the type of leasehold properties they’re happy to lend on.
With leasehold houses, they’ll want to know your ground rent charges and see a copy of your lease agreement. Meanwhile, some lenders might give a firm no to lending on certain types of leasehold flats.
With us, you can get equity release on most kinds of leasehold houses, flats or maisonettes. But we have certain requirements that need ticking off. So you should always get in touch to ask about your individual circumstances.
Getting equity release on a retirement flat
Yes, it’s possible to get equity release on a retirement flat. However, the pool of lenders who offer this is small. We don’t offer equity release on retirement flats or any other age restricted properties.
How many years do you need left on your lease to get equity release?
When a leasehold property is built, the lease is set for a certain amount of time. The length of yours will be on your title deeds and in your lease documents.
Lenders will want to know how much time is left on your lease when weighing up if they can offer you equity release. They’ll have a minimum requirement for the number of years left. And this will change from lender to lender.
With us, the number of years you have left on your lease plus the age of the youngest borrower must equal at least 160. For example, if the youngest borrower is 70 years old, there must be at least 90 years remaining on the lease. Because 70 + 90 = 160.
What happens if your lease is too short for equity release
If you don’t have enough years left on your lease, there are a couple of things you can do. For example, you may be able to extend the length of the lease. But be warned, this will rack up some costs, including legal and valuation fees. If this is a route you want to take, speak to your freeholder or managing agent to find out exactly what’s involved.
Can you use equity release to extend your lease?
Yes, you can use some of the money you unlock from your home to pay for a lease extension. Different lenders will have different requirements for how you approach this.
For example, with us, you’ll need to get written evidence that you and your freeholder have agreed on the leasehold extension. The extension must then be completed at the same time as the equity release loan is made (or earlier).
Information you’ll need to provide about your leasehold property
If you’re looking to get equity release on a leasehold property, your lender will ask to see certain information. This could include the:
- Service charge
- Ground rent
- Buildings insurance
- Sell-on fees
- Number of years remaining on the lease
- Age of youngest borrower
And if you live in a leasehold flat, they may also want to know things like how many storeys the block has and what floor you live on, if it’s covered by block insurance and if there’s a management company.
How we can help
The type of equity release we offer is called a lifetime mortgage. Every year this helps thousands of people tap into the value of their home without having to move or make monthly repayments.
Find out more about our equity release lifetime mortgage.