Mortgage products may soon be widely available for short leasehold properties. Mortgage brokerage Cobalt Capital has made it possible to borrow on high value, central London properties with short leases at normal rates.
In the past it has been hard to find lenders who will lend on such properties because, although leases can be extended, there is no way of ensuring a home owner does so, thus endangering the lenders’ security.
Cobalt has negotiated a tranche of money from a leading mutual to lend on a fixed rate of 4.25% for two years. It will be available for leases as short as 15 years on loans up to £500,000. The product has been developed for three specific private estates in Knightsbridge: the Grosvenor Estate, Wellcome Trust Estate and Cadogan Estate.
Andrew Montlake, director at Cobalt Capital, said: ‘Around Knightsbridge, many properties on these estates are down to around 20 to 25 years and it has, until now, only been private and international banks who would be able to lend on them. These banks take quite high margins and fees, so this is the first time there is a normally priced rate available.’
Montlake believes this product is a dry run for a more general market release. He said: ‘Lenders like to test the water if they are lending outside their normal experience. This particular lender has looked at the situation from its end and decided to run a test with us. If it is successful, we would expect this product to be made available to the wider broker market.’