What to check if you’re leasehold and want a secured loan

Leasehold secured loans - the essentials you must verify

Secured loans can be an efficient way to raise funds at competitive rates, but leasehold ownership adds rules you cannot ignore. Lenders in England and Wales look first at security. That means your lease, ground rent, and building type all influence if you are accepted and how much you can borrow.

Lease length matters twice. Many mortgage lenders want 70 to 85 years remaining at application and may ask far more on new builds, often 125 years. For secured loans specifically, the key test is the lease remaining at the end of the loan term. A common rule of thumb is a minimum of 40 years left when your loan finishes. If your lease is short, lenders either reduce the loan-to-value, price higher, or decline outright. Extending the lease before you apply can unlock better terms and lower costs.

Ground rent is another gatekeeper. Lenders examine the level, how it rises, and whether it contains doubling or index-linked clauses. Onerous or escalating ground rents can deter lenders or shrink your borrowing capacity. The same applies to service charges and any restrictions buried in the lease. A clean, predictable cost profile strengthens the case for approval and a sharper rate.

Property type and valuation also count. Ex-council flats often have a minimum valuation threshold, typically around £100,000. High-rise flats over six storeys may need a valuation above £200,000. These requirements reflect perceived marketability and risk. Where buildings are less liquid or carry management complexities, lenders tighten criteria to protect the security underpinning your loan.

Understanding APR is not just about percentages - it is about what you will pay in real money over time. Your lease and building terms shape that outcome.

The regulatory backdrop is shifting. The Leasehold Reform (Ground Rent) Act 2022 has already removed ground rent on most new long leases in England and Wales, and further reforms are expected in 2025. Reforms aim to curb unfair terms and strengthen transparency, which can improve lender confidence over time. For you, that means keeping an eye on updates that could affect eligibility, costs, and your leverage when negotiating lease changes.

At Kandoo, we broker retail finance in the UK market. Our role is to map your leasehold details to lender appetite so you know what is realistic before you apply. That avoids avoidable declines, credit file marks, and wasted valuation fees.

A simple rule helps you frame next steps: check the lease years that will remain at the end of your proposed loan term, confirm your ground rent terms, and validate the property valuation against lender thresholds. If any of those fall short, consider a lease extension or a different funding route.

Short standout line: Stronger lease terms usually equal stronger loan options.

Is this for you?

If you own a leasehold flat or house in England or Wales and want to borrow against your property, this guide is for you. It is particularly relevant if you have fewer than 90 years left on the lease, ground rent that doubles or escalates, or you live in an ex-council or high-rise block. It also matters if you are considering a second charge, releasing equity for home improvements, consolidating debt, or funding a time-sensitive purchase.

Applicants with temporary residency rights will also find guidance on what documentation lenders expect and how credit history affects approval. If you are in Wales, note that policy and reforms can differ from England, including minimum terms for new leases. The aim is to help you avoid surprises, improve eligibility, and choose the most suitable borrowing route.

Jargon, decoded

• Lease length remaining: Years left on your lease now and at loan end. Lenders often want 70 to 85 years at approval for mortgages and at least 40 years remaining when a secured loan ends.

• Ground rent: The rent paid to the freeholder. Lenders assess the level, review escalation clauses, and may decline where costs double periodically or escalate sharply.

• Service charge: Your share of building upkeep. High or unpredictable charges can reduce affordability assessments and lender appetite.

• Loan-to-value (LTV): The loan as a percentage of your property value. Shorter leases and onerous terms often reduce permissible LTV.

• Second charge: A secured loan taken in addition to a first mortgage. It ranks behind the first charge and follows stricter criteria for leaseholds.

• Equity release: Later-life borrowing that often requires a long lease, commonly 75 years or more, with tighter product-specific terms.

• Valuation threshold: Minimum property values lenders accept for certain blocks, for example £100,000 for many ex-council flats and over £200,000 for high-rise flats.

• Residency status: Proof of permanent UK residency often required. Temporary residents may face higher credit score thresholds and additional checks.

Ways to borrow against leasehold

1. Second charge secured loan

   • Uses your equity while keeping your existing mortgage. Useful if your mortgage rate is attractive. Criteria tighten if the lease will fall below 40 years by the end of the term.

2. Further advance from your current lender

   • Adds borrowing to your mortgage. Lease length must meet your lender’s mortgage policy, often 70 to 85 years at application and suitable years remaining at term end.

3. Remortgage to a new lender

   • Replaces your mortgage and can raise funds. Strongest rates require healthy lease length and acceptable ground rent terms. New-builds can demand 125-year leases.

4. Equity release (later life)

   • Requires longer remaining leases, often 75 years or more. Products are sensitive to ground rent and building risk factors.

5. Unsecured personal loan

   • Not tied to the property, so lease limits do not apply. Borrowing amounts are smaller and rates can be higher than secured options.

If your lease will dip below 40 years before your loan ends, expect a no.

What it could cost and why it matters

Typical lender criteria in GB

Lenders align leasehold criteria with risk. They typically want enough years on the lease at application for mortgages, often 70 to 85 years, and enough remaining years at the end of the secured loan term, commonly at least 40. Where new-build leases are involved, terms of around 125 years are widely expected. Borrowers in ex-council or high-rise blocks must also clear valuation thresholds, with many lenders looking for at least £100,000 for ex-council flats and more than £200,000 for high-rise properties over six storeys. Ground rent is scrutinised for affordability and fairness. Doubling or steeply escalating rent can trigger declines or sharply lower LTV.

Residency is part of eligibility. Many lenders prefer permanent UK residency. Applicants with temporary status may face higher credit score bars and must demonstrate stable income, traceable credit, and progress toward settled status. Where there are existing charges, lending behind personal or private charges is often by referral only, reflecting a cautious stance on second charges.

In Wales, the policy landscape is evolving. New leases often run longer - commonly 125 years for flats and 250 for houses - and active reviews focus on leaseholder experience and reform. Across England and Wales, the 2022 ground rent reform and likely 2025 changes are improving transparency and may soften lender policies over time, but current criteria still apply case by case.

From check to completion - the process

1. Confirm lease years now and at loan end

2. Review ground rent and any escalation clauses

3. Validate building type and valuation thresholds

4. Gather ID, residency and income evidence

5. Get advice on lease extension feasibility

6. Compare secured loan options and LTV bands

7. Apply, complete valuation, legal, and draw down

Upsides vs trade offs

Red flags and fine print

Before you apply, map out your lease journey. If your lease will cross below 40 years during the term you want, consider extending first or shortening the loan. Ask your solicitor to test the ground rent clause against lender criteria and confirm service charges, building insurance, and any restrictions. In complex blocks, check fire safety and management compliance as these can affect valuation and lending appetite. If you have temporary residency, prepare documentation early and track your credit score. Keep watch on leasehold reform updates which could improve terms or alter costs of extending your lease. Where a second charge sits behind another private or personal charge, expect additional scrutiny and potential delays.

Plan B options

1. Lease extension then apply - often improves LTV and rate, and increases marketability.

2. Further advance with your current lender - can be simpler if they already accept your lease terms.

3. Part-secured borrowing - combine a smaller secured loan with an unsecured top-up.

4. Remortgage to a lender friendly to your block - useful if valuation thresholds are met.

5. Delay and repair - build credit, stabilise income, or resolve ground rent issues before applying.

Quick answers

Q: What lease length do I need for a secured loan? A: Many lenders want at least 40 years remaining at the end of the loan. At application, mortgage policies often expect 70 to 85 years, with new builds commonly 125.

Q: Will ground rent clauses affect approval? A: Yes. Doubling or steep escalation clauses can lead to refusal or lower LTV. Fixed or modest index-linked ground rents are more acceptable.

Q: I am in a high-rise flat. Can I still borrow? A: Possibly, but many lenders require valuations above £200,000 for flats over six storeys. Expect tighter criteria and careful block assessment.

Q: What about ex-council flats? A: Many lenders set a minimum valuation of around £100,000. Below that, options are limited or unavailable.

Q: Do I need permanent UK residency? A: Often yes. Temporary residents may face higher credit score hurdles and must show clear progress toward permanent status, plus strong affordability.

Q: Can I do equity release on a leasehold? A: Often, but products typically require longer leases, commonly 75 years minimum, and clean ground rent terms.

Q: I have another private charge on the property. Is lending possible? A: Sometimes, but lending behind a personal or private charge is usually by referral and subject to strict conditions.

Move forward with Kandoo

Ready to check eligibility without guesswork? Share your lease details, ground rent terms, and property type. We assess lender appetite against your exact profile, compare rates and LTVs, and highlight whether a lease extension first would save you money. That way, you apply once, with confidence.

Important information

This guide is for general information only and does not constitute financial or legal advice. Always seek independent legal review of your lease and regulated advice on secured borrowing. Lending is subject to status, valuation, and lender criteria in England and Wales.