How easy is it to put a second charge on a property where the owner agrees ?

Say someone has a property with a mortgage and I want to lend them a large sum of money and take a second charge on their property as security. Just how easy is that ?

Moving on, can this second charge be variable, based on criteria fixed when the charge was placed on the property ? An example could be a variable interest rate on the debt and thus the charge.

Alternatively, can you put a charge for £1,000,000 on a £100,000 property to cover any eventuality ?

All with owners consent of course.
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  • paddedjohn
    paddedjohn Posts: 7,512
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    how would you expect to recover £1,000,000 when the £100,000 property sells?
    Be Alert..........Britain needs lerts.
  • holly_hobby
    holly_hobby Posts: 5,363
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    It is not as simple as having your solicitor register a 2nd charge, as the mge lender with 1st charge has to agree any subsequent charges applied to the property - which they may reject. Additionally there must be sufficient equity in the property to satisfy both 1st and any subsequent charges - usually qualified by survey and valuation.

    First point of call is to establish whether the current lender will accept 2nd charges.

    Hope this helps

    Holly
  • paddedjohn wrote: »
    how would you expect to recover £1,000,000 when the £100,000 property sells?

    It is a principle, kept simple by using simple numbers.

    Stirling Moss lives in a £15,000,000 property he built for £5,000. Does that answer it for you ?
  • It is not as simple as having your solicitor register a 2nd charge, as the mge lender with 1st charge has to agree any subsequent charges applied to the property - which they may reject. Additionally there must be sufficient equity in the property to satisfy both 1st and any subsequent charges - usually qualified by survey and valuation.

    First point of call is to establish whether the current lender will accept 2nd charges.

    Hope this helps

    Holly

    Why does a first charge holder have to agree a second charge ? I fail to see what it has to do with them.

    I know there was mention of a first charge holder not being able to get good title to the property if a subsequent charge was not covered in full, but cannot this be overcome with some simple legalese, effectively limiting the 2nd charge to the available equity after the 1st charge holder has been discharged ?
  • Thrugelmir
    Thrugelmir Posts: 89,546
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    Why does a first charge holder have to agree a second charge ? I fail to see what it has to do with them.

    In order for title to the property to be released on sale or disposal. All charges have to be satisfied. If the 2nd charge holder did not receive the funds to discharge their charge. They could effectively refuse and block the disposal.

    The 1st charge holder would then need to make application to a court.
  • agrinnall
    agrinnall Posts: 23,344
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    It is a principle, kept simple by using simple numbers.

    Stirling Moss lives in a £15,000,000 property he built for £5,000. Does that answer it for you ?

    This must be one of the most nonsensical things ever said on MSE (which takes some doing!).
  • holly_hobby
    holly_hobby Posts: 5,363
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    Why does a first charge holder have to agree a second charge ? I fail to see what it has to do with them.

    I know there was mention of a first charge holder not being able to get good title to the property if a subsequent charge was not covered in full, but cannot this be overcome with some simple legalese, effectively limiting the 2nd charge to the available equity after the 1st charge holder has been discharged ?

    You have asked the forum for guidance on 2nd charges .. and you have received it.

    I am sorry that you aren't happy that the existing mge lender has to provide their authority for 3rd parties to register subsequent charges - but they are the facts, whether they are agreeable to your plans or not.

    Holly
  • property.advert
    property.advert Posts: 4,086
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    agrinnall wrote: »
    This must be one of the most nonsensical things ever said on MSE (which takes some doing!).

    Nonsensical ? that a property can increase in value over time ?

    Why that does not make sense it beyond me.
  • property.advert
    property.advert Posts: 4,086
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    You have asked the forum for guidance on 2nd charges .. and you have received it.

    I am sorry that you aren't happy that the existing mge lender has to provide their authority for 3rd parties to register subsequent charges - but they are the facts, whether they are agreeable to your plans or not.

    Holly

    Not quite. I'm not sure one cap fits all as you seem to accept.

    A little like thinking Nat West offers the whole cornucopia of banking products and then digging a hole in the sand for your head to ensure you never hear it does not.

    I think we need a little out of the box experience / thinking. Sort of pushing the envelope kind of thing.
  • holly_hobby
    holly_hobby Posts: 5,363
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    edited 17 July 2011 at 8:17PM
    I have the impression you have no knowledge on how the charging process works.

    Further to which what on earth are you talking about .... cornucopa of banking products, hiding your head in sand ... what ??

    Your initial question was how easy is it to register a 2nd charge to a mortgaged property.

    To which I replied that a 2nd charge to a mortgaged property requires the mge lenders consent - and I don't think there is any amount of "out of the box thinking or experience" that will alter that fact ...

    The best thing to do is to have your friend or whom ever you intend to lend money, to contact their mge lender and find out for certain what their requirements re 2nd charges are - then you will know if they share your way of thinking or not ......

    Holly
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