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How we open up equity release to older homeowners with mid-term leases

October 4th 2021

How do you go about arranging a lifetime mortgage for a client who on has a mid-term lease?

If you’re a financial adviser, there is a strong chance that you have asked yourself this question many times over the course of your career.

In short, you can’t. Or at least, not easily – until now.

Lifetime Mortgage Gateway Logistics (LMGL) has created a one-of-a-kind offering that helps older homeowners extend their lease and – apply for a lifetime mortgage.

Let us explain how.

What is the problem?

Equity release providers will not advance funds to homeowners who have 75 years or less left to run on their lease.

Of the 4.6 million leasehold properties in the UK, our data shows that as many as 500,000 of them have an unexpired lease of 75 years or less.

It means there are potentially thousands of older homeowners of equity release age who are unable to unlock the equity in their property without first extending their lease.

However, extending a lease by 90 years – otherwise known as enfranchisement – is a long, complicated and often very expensive process.

Meeting those costs can be difficult if you are retired or on a fixed income, meaning many elderly leaseholders are effectively trapped.

What’s more, once a property dips below the 75-year threshold, it depreciates in value significantly, and the cost of extending the lease jumps commensurately. Therefore, selling it for a fair price becomes very difficult.

What is the solution?

As outlined above, in order to qualify for a lifetime mortgage, your client will first have to extend their lease – and pay tens of thousands of pounds to do so.

However, LMGL has created the UK’s first all-in-one process that not only guides your client through the enfranchisement process, but also secures them the lifetime mortgage they need to gain access to the cash tied up in their property.

Crucially, your client will not have to pay a penny up front, with all of the associated costs covered via interim funding which is then repaid from the lifetime mortgage.

Tell me more about the process

Using our network of respected and trusted partners, we manage first the lease extension and, after that, the process of applying for the lifetime mortgage.

Firstly, our partner will secure a short-term mortgage contract to meet the professional costs of enfranchising.

Following that, your client will go through the enfranchisement process, having previously spoken to our equity release adviser partner Key to arrange the lifetime mortgage once the lease is extended.

Once your client has received the funds, a portion of that money will go towards paying the 90-year lease premium and paying off the short-term mortgage contract, which covered the enfranchisement upfront costs and LMGL’s fees.

The money that is left is for your client to spend on whatever they need it for.

Who are your partners and why did you choose them?

When we founded LMGL, we were adamant we only wanted to work with the most respected names in the industry.

By working with the best, we are confident we will make the process of enfranchising and applying for a lifetime mortgage as seamless and stress-free as possible.

All of our partners are regulated and highly respected in their fields. They include equity release advisers Key, loan brokers Vantage Finance, enfranchisement legal experts Ince and surveyors & leasehold enfranchisement practitioners Egerton.

You can find out more about our partners on our About Our Company page.

What next?

If you have a client who is trapped with a mid-term lease and needs to release the equity in their property, then please do get complete our evaluation form.

It could make a world of difference to them.

Could your client benefit from a mid-term leasehold extension?

Lifetime Mortgage Gateway (LMG) helps leaseholders extend their mid-term leases to enable them to qualify for a Lifetime Mortgage.

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