20180907 Loan while expiring lease?

20180907 (Fri)

A property expiry in leasehold terms, would bank still give loan facilities?

Even the loan facility was approved and buyer got a good deal in buying, the conveyancing procedure will drag on.

The bank will not disperse of its loan without the lease being extended, it varies from bank to bank. Hence, when such is the case, the seller will not get fully paid until it is extended. In many old houses, the advice before selling is to extend the lease before selling.

A soon (20 years) expiring lease can still fetch good title. It is just procedural that the State Authority has to give consent to extend the lease. This can take time. Some states will take 2-3 months, some longer. The premium upon extension is different from states to states. In Sarawak, the premium payable for lease extension is very cheap. It is based on type of property. See the website of Sarawak Land & Survey here.

For a semi-d, the renewal of land lease (RLL) to 60 years is RM3,000 per house. So, when this house is left with 20 years, the seller has to to lose the remaining 20 years and give a new 60 years of lease (or 99) starting from approval date.

With the new 60 years lease, the bank will thus be more favourable to provide the mortgage facility and you get a good value as well.



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