Older homeowners with a ‘mid-term’ lease can find themselves trapped as their property loses value every year unless the lease is extended
Lifetime Mortgage Gateway, a new service facilitating lease extensions for large numbers of older homeowners trapped with short leases, has been launched by LMG Logistics (LMGL).
Older homeowners with a ‘mid-term’ lease (75 years or less to run) can find themselves trapped as their property loses value every year unless the lease is extended.
The only way they can stop their property losing value and put themselves in a position to qualify for equity release is to extend their lease. However, the lease extension, or enfranchisement, process is complicated and can cost tens of thousands of pounds.
The Lifetime Mortgage Gateway (LMG0 service helps older homeowners extend their lease and secure the value of their home. It also allows them to release additional money to pass onto loved ones, clear debts or boost their pension income.
With the help of a small group of highly respected and trusted partners, LMG says it can arrange a short-term loan to pay for the costs of extending the lease. After that, a lifetime mortgage is put in place to cover the cost of the short-term loan and fund the 90-year premium or in some cases the freehold.
While the lifetime mortgage provided via LMG is designed to cover the cost of the lease extension, the leaseholder has the option to release further capital from their home should they need it.
The LMG process brings together respected partners from the world of financial services, property and legal services in order to deliver, including Key, Vantage, Egerton and Ince. This is all with the aim of tackling this disparity and helping those stuck in this ‘mid-term lease trap’. The LMG service can be accessed via financial advisors and intermediaries, and is the first and only of its kind in England and Wales.
Guy de Jersey, a director at LMGL, the provider of LMG, says: The government estimates there are 4.8m leasehold properties in the UK and about 500,000 of those are held on sub 75-year leases, against which leaseholders cannot access equity release. This is a major issue, and practical assistance and options for these unserved people is long overdue.
He continues: Too many leaseholders end up caught in this ‘mid-term lease trap’ and are left with little option but to sell their home or sit on an asset losing value. We are delighted to be working with a coalition of distinguished partners at the forefront of the market in terms of credibility, integrity and scale to ensure we deliver this new and innovative service to the many thousands of people needing it.
Jason Ruse, Business Development Director at Key Group said: Extending a lease can be a significant financial burden at any age but it is particularly worrying if you are retired and forced to watch the value of your home – and your family’s inheritance – gradually decrease. The innovative LMG approach uses a combination of different financial options to help older borrowers solve this problem and enjoy a more secure retirement.
Joseph Aston, National Sales Manager at Vantage Finance says: This area of the market is simply unserved and so we are delighted to work collaboratively with the other organisations involved to offer something truly unique and necessary.