Separation and Second Charge(?) on a New Property

AnnKittenplan

To DH and hh

Thanks again. Apologies for not responding sooner but I've been away over the weekend.

To give you a flavour of my situation I emailed the various matrimonial and conveyancing solicitors involved late on Friday, saying that the problem might be the difference between a Second Charge on an existing and on a new mortgage. This morning I got the following reply:

I can absolutely assure you that there is no confusion over any second charges. They are exceedingly common and have been for the 40 years that I have been dealing with them in practice. They are especially common in circumstances such as your own. They are no more straight forward on an existing mortgage as they are on a new mortgage the only problem is the attitude of the lenders which since the recession began has changed for the worst, but without any real rational behind it. Getting the second charge from the outset is not impossible it simply requires a lender who is not obstructive.

This simply does not tally with my experience. The mortgage lenders I have spoken to look at me like I am asking the unprecedented and the impossible, not just the unusual.

So back to where we started. Solicitor says it's "exceedingly common", mortgage lenders say, "You've got to be kidding."

I think I'm going to pursue the idea of applying the Second Charge after the mortgage has been agreed.

AnnKittenplan

To Thrugelmir

I'm reluctant to answer this question. I hope you understand.

holly_hobby

Who the children live with is largely irrelevant to the guidance reqd.

As stated earlier, the issue is NOT second charges as a whole - but the succession of order of charges, how this is an issue where mortgages are invovled. This is fact.

This is due to the order of succession, and the fact that all lenders require 1st chargee. I can only assume from the solicitors reply (despite 40 yrs experience), that they are not conveyencing solicitors ( so are not familiar with mge lenders, 1st charges, et al), but rather Family law solicitors - so they are viewing this from a rather simplistic point of view. And rather forgetting the fact that registration of a 2nd charge on a mortgaged (or to be mortgaged ) property , is at the complete discrection of the mortgage lender - of which they can and on occassion do refuse permission.

As prev discussed, the easy solution if you want to effect the charge simultanously at completion (which means that it will be considered as part of the UW process, and you will know before hand if the situation is acceptable to the lender - allowing your ex to source an alternative if declined), is to register the 2nd charge (subject to lenders permission as discussed), UNDER A DEED OF POSTPONEMENT, meaning that its gted to be registered after 1st charge by LR.

In fact I am astonished that the same solicitor haven't presented this as an easy solution to the situation.

Funnily enough, another thread re a 2nd (equitable) charge has appeared, and the issues are roughy the same, albeit in this case there is already a 2nd charge in place, with the new lender themselves suggesting the 2nd charge be place under a Deed of Postponement - to permit them to lend under 1st charge. The problem in that thread is that the beneficaries Solicitor is refusing to do it - hence the OP will be prevented from securing a new mortgage.

As already discussed, if you want to apply the registration post completion, I would strongly suggest that this is sounded out with the lender beforehand, as you are aware that there is no pre-requisite for them to permit registration - which will leave you up mucky creek without a paddle !!

Have a read of the other similar thread, may give some more guidance for you http://forums.moneysavingexpert.com/search.php?searchid=126253049

There's not much more I can say on this, that hasn't already been said .... your Solicitor's representation of charges and lenders wanting 1st charge as purely being obstructive and largely due to the recession, hugely mis-leading to the layman, and to be frank wildly and wholly inaccurate (and really quite worrying to be honest !) - as lenders have always reqd 1st charge registration - period.

Hope this helps

Holly

AnnKittenplan

He's a conveyancing solicitor!

I may have missed out some vital information here or in speaking to him, which is leading to a misunderstanding, but I can't think what it is.

Related: I have just spoken to a mortgage adviser with some specialism in separation from Capital Fortune (not allowed to post links yet)

I wasn't able to give him all the information but he seemed to think mortgages would be available.

In this conversation I also learned that if I had a Second Charge then I would be (jointly and severally?) liable for the mortgage. This may seems glaringly obvious but it was something I hadn't considered at all, even as a possibility.

This may require a level of co-operation which my ex is not comfortable with.

And while I was typing that I got phone call from another local mortgage broker who was emphatic that I wouldn't get a mortgage with a Second Charge attached. I'm beginning to lean towards this being the case.

I think I need to find another way to resolve this.

Thanks.

The_J

AnnKittenplan wrote: »

To Thrugelmir

I'm reluctant to answer this question. I hope you understand.

It's an entirely irrelevant question so ignore it (edit: would say, it's clear as day where they would be living anyway, that being the point of this whole discussion).

If you have a second charge you will absolutely not be liable for the mortgage, that guy is an absolute retard.

Have you tried Halifax? Pretty sure they can do this.

mgdavid

AnnKittenplan wrote: »

@hh

Also, Thanks.

I am awaiting for a proposal from his solicitor on how I can secure my 12½%, it may be the idea you suggest.

I'm still not clear on when Second Charges come into existence though.

At mediation four years ago we were told A Charge is the routine way to resolve this issue of protecting an investment. My conveyancing solicitor (30 years experience) says he has drawn up countless Charges with the routine Triggers I described, and now potential lenders are acting like we're from Neptune:

You've got a mortgage?
You're separated?
There's equity?
Why...it's unheard of!

I am still baffled, but the advice here has been very helpful. Again, Thanks.

I think your situation is most unusual; the Charges and Triggers you learnt about at mediation ARE common but only where one party stays in the current house and the other is moving out (and retains an interest / share of the equity).
Where parties both agree to sell and split the equity it usually results in a clean break financial agreement.

mgdavid

Thrugelmir wrote: »

Who are the children going to live with?

that seems to be answered in post #18, penultimate paragraph.

(well, where if not exactly who)

holly_hobby

Chr*st Almighty I can not believe the advice you have being given .... a mge adviser believes a 2nd charge means you are liable as party to the mge debt ..... a conveyencing Solicitor, believing that Lenders wanting 1st charge are just being obstructive and only want it as result of the recession, without any real rationale behind it ... absolutely mind boggling ... and I absolutely give up !

As J says, this is absolute utter crap - and extremely worrying from a professional aspect.

To repeat, having a mge with a subsequent request of a 2nd charge (ie - post completion) is completely possible and the usual format in such circs, thats IF the lender permits the registration of course - which as stated previously, isn't necessarily just an annoying formality or forgone .... as the lender has complete discretion as to whether they permit or reject the registration, which is binding on LR.

Having your charge registered at the same time as completion takes place, means the lender will probably require the registration to be under a deed of postponement, to ensure they obtain 1st charge registration under LR processing, and that its existance means that LR can only register your interest as a 2nd chargee, ensuring they obtain primary charge.

But as stated, even with a simultanous registration, you will STILL have to obtain the lenders consent to the the application of a 2nd charge, in this circumstance, their permission would be requested (and hopefully given) during the initial checking and uw stage. .

I can see that you are checking the advice given, which is absolutely right, and if it makes you feel any more confident - I am a qualified FA, and mge professional (inc training and auditing of mge advisors) - and have been in the industry for over 20 yrs - so my comments re charges, registration and succession, do all come from a professional background (as will be those from DH and J as noted mge advisors).

At this point, I feel all points I can give comment on have been discussed and exhausted really. You need to start talking to the lender to establish their view on the 2nd charge (because your whole plan hinges on this), and if agreeable to them how they want/prefer your Sol to administer it, either simultaneously as part of the purchase conveyencing (under a DOP), or post completion - when it cant be registered as anything other than a 2nd charge.

I wish you well and hope this helps ...

Holly

PS - sorry for the fruity language , but I couldn't help it in the circs ! x

Thrugelmir

AnnKittenplan wrote: »

To Thrugelmir

I'm reluctant to answer this question. I hope you understand.

Apologies I should have phrased my question differently.

The reason behind my question. Is the conditions on the "charge" you are proposing would apply in certain circumstances. I.E. if one partner was to remain in the family home with the children. Thereby protecting the interests of the other.

I assume that you've taken advice from a family law solicitor with regards to the division of assets. A conveyancing solicitor isn't the right person to be consulting. As you need a Consent order to protect your interests. This does not necessarily involve a charge on the property but is a legally binding agreement.

AnnKittenplan

holly_hobby wrote: »

Chr*st Almighty...

PS - sorry for the fruity language , but I couldn't help it in the circs ! x

This is kind of reassuring, as I thought I was going mad

I came here extremely confused. Yourself and others have been a great help. I'm pretty sure I now understand the situation with respect to Charges and Triggers.

I'm also pretty sure my ex actually had a mortgage till I tried to help out. I wonder if that offer can be reinstated.

If not then there'll be another way out.

From what I've learned here I feel like we've breached an impasse and we're closer to sorting this out. There's still some way to go but light at the end of the tunnel and all that.

Not sure what I'd've done otherwise.

Many Thanks.