UK Finance represents residential mortgage lenders who regularly lend to those wishing to purchase leasehold properties in England. Lending on leasehold does present additional risks when compared to lending on freehold. These can be broadly categorised as:
- Risks around the property’s marketability, saleability and value, depending on the lease term left and the terms of the lease.
- Risks for the lender’s interest in the property, in the event that the borrower tenant breaches the lease in some way, triggering the landlord’s rights of forfeiture.
- Challenges in assessing the borrower’s future ability to afford the mortgage payments, given future known and unknown financial obligations under the lease.
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