Charging Order? The myth

eggbox

setra wrote: »

EGGBOX, thanks for that so that basically means i would have little chance to remorgage the property in guessing, im in the senario of an interest only morgage and it has 3 years left and i dont really want to loose the house, i have 3 of these restrictions from a bancrupsy in 2006 for creditors, would you know of a long term solution for this sinario at all please
many thanks

You would find it extremely difficult to raise further funds by way of a remortgage without including the CO debt amount in the remortgage amount in order to pay it off so it is removed from the deeds?

However, whislt LRR may be able to help clarify here; I believe if you are just changing to a new mortgage (as your existing deal is coming to an end) then your original charge stays in place? It just means you will have to deal with your existing mortgage lender as swapping to a new company would be classed as new lending?

eggbox

simmian wrote: »

I have around 12 years left to pay my mortgage. We found out that we had 2 charging orders on the property last year. What would happen if we stay in the property and pay the mortgage off. Would we be forced to sell the property? Would we be forced to pay the charging orders?

Nothing will happen or kick into play unless you try to sell the property. Technically the creditor can apply at anytime for an Order For Sale, to realise the debt owed, but this is extremely rare as they are virtually imposible to achieve when the debt is attached to your family of main residence.

Most creditors will, usually, contact you within the first few months after they obtain a CO to try and leverage payment? If non is forthcoming then they assume they won't get paid until you sell the house and you are unlikely to be contacted again.

The only downside may be if there is interest being added to the debt as CO's attract 8% unless they are for CCA 1974 regulated loans or credit cards which shouldn't have any interest attached.

harisumo

eggbox wrote: »

You would find it extremely difficult to raise further funds by way of a remortgage without including the CO debt amount in the remortgage amount in order to pay it off so it is removed from the deeds?

However, whislt LRR may be able to help clarify here; I believe if you are just changing to a new mortgage (as your existing deal is coming to an end) then your original charge stays in place? It just means you will have to deal with your existing mortgage lender as swapping to a new company would be classed as new lending?

Our interest only mortgage is about to end, I have a restriction in my name only. We have successfully managed to get our existing lender to extend it on a repayment basis. This was done as an extension to the existing mortgage so we only needed to sign an amendment form. I did look into this and I understand that such amendments do not require any changes to the mortgage charge at Land Registry. I am not sure what would happen if it were a new mortgage, as opposed to an amendment to the existing one, with the same lender. It's ended a lot of sleepless nights for me. We intend to sell the house at some point and pay off what we owe but at least we have a breathing space to do it now.

Land_Registry

Just to reiterate that the wording of any restriction is normally enough to understand what it's impact is on any subsequent application to register

The standard wording is

No disposition of the registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of this restriction is to be registered without a certificate signed by the applicant for registration or their conveyancer that written notice of the disposition was given to [name of person with the benefit of the charging order] at [address for service], being the person with the benefit of [an interim or a final] charging order on the beneficial interest of {name of judgment debtor} made by the {name of court} on [date] (Court reference {insert reference}).

So key words/terms are
Disposition - a transfer, sale, a mortgage/legal charge, or a lease being the most common examples as the registered estate is being dealt with by means if a legal deed to which the registered owner/named debtor is a party

Registered estate - the registered title/property

So if you remortgage under the terms of the existing registered charge and the lender retains their existing legal charge/mortgage to protect that there is no disposition being registere.

If a new legal charge/mortgage is being registered then the restriction catches it and has to be complied with, namely the named creditor notified. A new legal charge/remortgage does not overreach the form K

eggbox

Harisumo

Thanks very much for that as its very useful advice and should help a lot of other people in the same position?

eggbox

Thanks LRR that confirms what I felt was the case, thank you!

Moveslikeagger

Hi all, I am in a DMP and have a question regarding charging order/restriction if I was ever to get one! My question is if I did get one of these (my debt is in my name but I have a jointly owned property). Would I be able to switch mortgage prouducts when my existing deal comes to an end? So I wouldn’t be look to re mortgage just switch products for a further fixed term rate. My current lender does not do any credit checks for a mortgage switch. I have heard conflicting messages on this but would be greatful for any replies. Thanks

eggbox

Moveslikeagger

Read post #3815 from LRR above which explains it will depend on, whether or not, any new legal charge is required?

Moveslikeagger

Thanks egg box, forgive me but I don’t have a clue what that means, I’d just want to switch mortgage products. Would this be ok?

eggbox

It means that as long as the original lenders loan remains in place, and only the mortgage product changes (for instance you switch from a variable rate to a fixed term rate with the same lender) then there is no problem as no, new, legal charge has been created.

If, however, you want to switch to a mortgage product with a different lender then this will create an issue because of the restriction still being in place. This is because the original loan would have to be ended and a "new" charge would then be created by the new loan.

The issue this causes is that charges (for loans or debts) on your deeds are dealt with in date order meaning that when a property is sold the first charge holder is paid off first. So mortgage lenders will only give you the loan if their charge is the first on the register.

This is not only to ensure they are paid off first when the house is sold; it's also in order to retain "power of sale" which allows the first charge holder to, also, wipe all other charges off the register in the event the house has to be repossessed and sold.

So switching to a new lender would mean the new loan created (or new legal charge) would be registered after the date of the restriction if the restriction is not paid off at the same time? Hence, a new lender wouldn't grant a loan under those conditions.