New service launches to help older homeowners extend leases with a lifetime mortgage

Lifetime Mortgage Gateway (LMG), a new service facilitating lease extensions for older homeowners trapped with short leases, has been launched by LMG Logistics.

Related topics:  Later Life
Rozi Jones
13th January 2022
equity release house plan mortgage sign house paper
"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."

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, while at the same time they are unable to release the equity built up in their property to boost their finances in retirement.

However, the lease extension process – known as enfranchisement – is complicated and can cost tens of thousands of pounds, making it unaffordable for many retired homeowners on fixed incomes.

The LMG service helps older homeowners extend their lease while also allowing them to release additional money.

With the help of a small group of partners, LMG arranges 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.

LMGL estimates there are around 500,000 homeowners with leases that have 75 years or less to run – many thousands of whom will be aged 55 years and over and will at some point need to release the equity in their property to boost their retirement savings.

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. The LMG service can be accessed via advisers and intermediaries.

Guy de Jersey, director at LMG Logistics, said: “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.

“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, commented: “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. At Vantage Finance our collective culture is to strive to ensure every one of our customers gets the best possible service and we are sure this will help more people get the outcome they need and want when it comes to their leasehold property.”

Tom Hutchinson, FRICS and director at Egerton, added: “As property experts, particularly in leasehold enfranchisement, we have seen at first hand the very real impact of the mid-term lease trap. Too often people are stuck and options are limited, so it’s fantastic that we have been able to come together with the other organisations in this process and to play our part in offering people more choice than simply selling up.”

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