Banking · Retail Loans & Mortgage
When assessing a property for mortgage advice, the lender identifies that it is a leasehold property with only 15 years remaining on the lease. The borrower wants a 20-year home loan. What should be the advice regarding the loan tenure?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The bank should ask for a personal guarantee from the landlord to extend the loan to 20 years.
- 2The bank should ignore the lease status and only focus on the market value of the building.
- 3The loan tenure cannot exceed the remaining period of the lease; in fact, it should be at least 5 years less than the remaining lease period to ensure safety.✓
- 4The bank can easily grant a 20-year loan because the lease will likely be renewed.
Correct answer
The loan tenure cannot exceed the remaining period of the lease; in fact, it should be at least 5 years less than the remaining lease period to ensure safety.
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