Equitable Charge needing a 2nd Charge Mortgages

DMPH

Hi all, I wonder if anyone can help.

I'm currently re-mortgaging and have an equitable charge on my property put on it by a solicitor for the estate of a deceased previous owner. The charge is purely hypothetical based on more property's being build on my land and it being sold seperately. Its something that won't be happening in my time there, but is there nevertheless.

After getting an offer from Nationwide on a remortgage everything stopped when the solicitor who'd arranged this charge would not agree to a deed of postponement and Nationwide not accepting being 2nd charge.

The long and short of it is we are now needing to find another lender who will accept 2nd charge on the registry and its looking like not many, if any lenders will now accept this position.

Does anyone know if there are any lenders out there who will accept being 2nd charge?

Many thanks

Dave_Ham

There was a detailed post on a slightly similar situation earlier re first and second charges..

It is incredibly unlikely a mainstream lender will accept this...

Not sure your original solicitor did you any favours with such a restrictive deed as this as almost rules you out of mainstream lending..

Holly was an authority on this matter earlier in the day, so hoping she can pick this up and give some more qualified advice.

I would just lean on my normal solicitor at this point as quite intricate.

I wish you luck in your search and please do update...

kingstreet

The minute your current mortgage is repaid, the second charge is promoted to a first and that won't be acceptable to any mainstream mortgage lender.

Why won't the second charge holder consent to providing a deed of postponement? It's a standard requirement in these circumstances, keeping the second charge a second charge.

DMPH

The solicitor holding the charge said that it's to protect the estate of the previous deceased owner. He's been particularly awkward about it and eventually said its because the estate was left to 10 individuals and 3 charities. To enter a deed of postponement it would mean contacting all of those at the expense to me of over £700 for the initial letter to all of the parties. Along with the time involved for this it doesn't look like its an option. My original mortgage was with Northern Rock and it looks like they were happy to go with 2nd charge.

Not sure how to move forward with this now.

GMS

Go back to the solicitor who completed your purchase. They should have flagged any issues with the title relating to previous owners.

Who is your lender? How did they agree to complete? If you paid cash then you need to seek legal advice.

Whatever the terms of the estate were from the previous owners you should have bought it with clear title, or with any restrictions made clear.

Thrugelmir

DMPH wrote: »

The solicitor holding the charge said that it's to protect the estate of the previous deceased owner. He's been particularly awkward about it

Not in the slightest awkward. Just doing the job he's been employed to do.

You need to weigh up whether its worth the cost to remortgage.

holly_hobby

Hi DH and all ...

As DH has said we have just had a very similar issue re charges - which is only in the last day or so, so will be easy for you to find and have a read through.

Without a deed of postponement on this current 2nd charge, you have absolutely no chance of securing any mortgage finance with a traditional mortgage lender - as all mge lenders demand 1st charge - without exception, and its not open to negotation with them. 1st charge effectively meaning that they get first dibs on the monies released on sale of the property.

As it stands, as soon as the current lenders loan is redeemed, and the registered charge removed with LR, under the order of sucession (and without a deed or postonement), the current 2nd charge moves up to 1st position - and thats where you are snookered re sourcing a mge lender.

Your only option without a deed of postponement, would be to obtain a secured personal loan (I'm saying this due to not knowing what the reqd finance is), as such providers are happy to accept a 2nd charge placement (1st charge ordinarilly being that of the applicants mge lender). If however the amount of finance reqd is o/s of their pemitted PL lending paramaters - you have a problem (unless of course you don't remortgage and stay where you are - which may be the only option if the Solicitor maintains their current stance !).

Sorry if not what you wanted to hear ... but the facts are the facts I'm afraid ..

Would the beneficiaries instead of an equitable charge, accept a restrictive covenant in its place ?

If so this would be administered under a deed of variation by the solicitor. Which should allow the 2nd charge to be effectively released, if agreeable.

Ask your Sol for their view and their suggestions for resolution of the issue the 2nd charge is causing - as at the moment you would also be prevented in selling the property to anyone requiring a mortgage due to the sucession of charge issues discussed (which will continue to affect the disposal of the property for either yourself or the administration of your estate upon death (sorry ) .. so its an issue that does need looking at, even if at this juncture you elect to stay with your current mge lender).

Hope this helps

Holly x