Secured loans on leasehold flats and short leases

How lenders typically treat it

A general guide to how the market behaves, not a promise about any lender. Criteria change and every case is assessed individually. See the lender criteria database for named lenders.

How long does my lease need to be for a secured loan?

Long enough that the lender still holds good security on the day you make the last payment. Most secured loan lenders express this as a minimum number of years remaining at the end of the term, and the common range is 70 to 85 years. Subtract the term from the years left on your lease and compare the result with the lender's floor.

• A lease with 110 years left and a 20-year term leaves 90 years, which meets most policies.
• A lease with 95 years left and a 15-year term leaves 80 years, which meets many policies and misses a few.
• A lease with 82 years left and a 15-year term leaves 67 years, which most lenders would decline without an extension.

The reason lenders care is the marriage value cliff. Once a lease falls below 80 years, the cost of extending it rises sharply because the freeholder becomes entitled to a share of the uplift in value, and a flat with fewer than about 70 years left becomes hard to sell to a buyer who needs a mortgage. A lender that had to take possession of such a flat would face a discounted price and a slow sale, so it protects itself with the end-of-term rule.

If your lease is on the short side, there are two practical responses. You can shorten the term so that more years remain at the end, which raises the monthly payment; or you can extend the lease.

Do ground rent and service charges affect a secured loan?

Yes, in two different ways. The first is affordability. A secured loan lender assesses whether the new payment fits alongside your mortgage, your household costs and any debts you are keeping, and for a leasehold flat that means ground rent and service charges go into the calculation as fixed monthly outgoings. A £2,400 annual service charge is £200 a month that reduces the amount you can borrow, exactly as a car finance payment would.

The second is the lease itself. Since the Leasehold Reform (Ground Rent) Act 2022, new residential long leases in England and Wales carry a peppercorn ground rent, but older leases can contain clauses that lenders dislike. The most common problem is a doubling clause: ground rent that doubles every 10 or 15 years quickly becomes a large fixed cost, and many lenders will decline a lease that doubles more often than every 20 years. Some lenders also cap ground rent as a share of the property value.

A lease with an onerous ground rent clause is not always a dead end. Some freeholders will agree a deed of variation to swap doubling for an inflation link, and a lease extension under the statutory route reduces the ground rent to a peppercorn. Either fix takes time and money, so it is worth knowing early whether your clause is going to be a problem. Your solicitor or a leasehold adviser can tell you from the lease.

Do I need the freeholder's permission for a secured loan?

Not usually. A long residential lease almost always allows you to mortgage or charge the flat without the landlord's consent, because the ability to borrow against it is part of what makes the lease valuable. What many leases do require is that the landlord is notified after the event: your solicitor serves a notice of charge, sometimes with a small registration fee set out in the lease, and the freeholder or managing agent records it. That is an administrative step, not a decision the freeholder can refuse, and it happens after completion rather than holding the loan up.

There are exceptions. A minority of leases, more often on older or unusual developments, contain a covenant that requires the landlord's consent to any charge. Retirement and some shared ownership leases can have similar restrictions. If yours does, the consent is usually a formality but it adds time and sometimes a fee, so tell the adviser at the start. Asking your solicitor to check the charging and alienation clauses before any lender is approached avoids a late surprise. Our shared ownership page covers the extra steps that apply to that tenure.

A related question is whether your existing mortgage lender must agree. A second charge lender will ask your first mortgage lender for consent to register its charge behind the mortgage, and this is standard practice rather than a hurdle. Our guide on whether a secured loan affects your mortgage explains that process.

Can I use a secured loan to extend my lease?

Yes, and it is one of the more common non-consolidation purposes. A statutory lease extension on a flat adds 90 years to the existing term and reduces the ground rent to a peppercorn, and the premium can run from a few thousand pounds on a long lease to tens of thousands on a short one. Many secured loan lenders will lend for that purpose, either on its own or combined with clearing other debts in the same loan.

The timing trick is simultaneous completion. If your lease is already too short for the lender's end-of-term rule, some lenders will assess the case on the extended lease, provided the extension completes on the same day the loan does. Not every lender offers this, so a broker will place the case with one that does; the alternative is to pay for the extension first and borrow afterwards.

The law here is changing. The Leasehold and Freehold Reform Act 2024 removed the two-year ownership requirement before you can claim an extension and provides for 990-year extensions and a revised way of calculating the premium, but parts of the Act are being brought into force in stages. Check gov.uk for the current position before deciding whether to extend now or wait. A lender will only work from the lease that actually exists on completion day, not the one the law may allow later, so the extension has to be done rather than planned. The solicitor pays the premium from the loan on the day.

What would a secured loan on a leasehold flat cost?

The tenure itself does not change the rate. Pricing is driven by credit history and combined loan to value, and a leasehold flat with a long lease and sensible ground rent is priced the same as a freehold house. The amount available can differ, because service charges reduce affordability. The example below uses the fixed illustrative rate applied across this site.

Monthly outgoings on those debts fall from £532 to £190 in the example, while the total repaid over 15 years, £34,196, is well above the £20,000 borrowed because the term is longer. The loan is secured on your flat, and if you do not keep up the payments your home may be repossessed. If the debts feel unmanageable rather than merely expensive, free and impartial advice from MoneyHelper, StepChange or Citizens Advice should come before any secured borrowing.

What improves your chances

• Check the exact number of years left on your lease from the title or the lease itself, and work out what will remain at the end of the term you want.
• Read the ground rent clause, or ask your solicitor to, so you know before applying whether it doubles and how often.
• Bring service charge and ground rent payments fully up to date, and have the latest demand and accounts ready for the adviser.
• If the lease is short, ask about a simultaneous lease extension rather than assuming the loan is off the table.
• Gather the block's paperwork: buildings insurance, the managing agent's details and any EWS1 or external wall report.
• Choose a term that leaves enough lease at the end; a slightly shorter term can move a borderline case into policy.

Alternatives worth considering

If your fixed rate has ended and your lease is long, a remortgage to pay off debt may cost less overall, since the whole balance moves to one rate; our secured loan versus remortgage comparison sets out when each route wins. For a lease extension on its own, some homeowners use savings or a personal loan and avoid securing more on the flat. And if the underlying issue is that the debts are unmanageable, a debt management plan or an IVA through a free debt charity may be the more honest answer; see our comparison with an IVA.