Our client owned a property in Grosvenor Square with a short lease of 13 years for which reason he needed to extend the lease.
Having done some initial enquiring, he had been quoted £1.7 million for a lease extension of 90 years on top of the remaining 13 years.
The current value of the property with the short lease was estimated at £1.3 million but it was estimated to be worth £3.4 million post extension – significantly increasing the value of the property.
The existing mortgage of £500k needed to be replaced as the existing lender was asking for the loan to be redeemed due to the lease length. The client also wanted to raise some additional funds in order to complete much needed refurbishment works in between tenants. For this reason he needed a short lease mortgage extension to fund the various elements relating to the property.
We managed to get a bank to agree 50% (£650k) funding based on the current valuation, which paid the existing mortgage off and gave our client £150k to modernise the property.
The bank also agreed to fund the whole cost of the lease extension (£ 1.7 million) on the proviso that it was completed within 12 months of the initial drawdown.
The rate started at 5% and dropped to 3.5% once the lease extension had been granted. My client was really happy with the result and his short lease mortgage and said it was more than he had initially expected.