Deed of postponement

alarmed

Can an advisor please explain what a deed of postponement is (in plain English!)where there is a secured loan in place.

Thanks as usual

kingstreet

It is an agreement which stops the second charge being promoted to a first charge when you remortgage.

In the usual course of events, when you repay the mortgage (a first charge) any other charge is promoted. However, this will not be acceptable to a new lender, so they ask the second lender to agree to stay a second lender, so they can be first.

Shared equity also requires a deed of postponement when remortgaging, as this is also a second charge over the property.

Thrugelmir

The debt owed to Lender 1 is repaid first.

Lender 2 is settled out of any remaining funds.

For Lender 2 to put a charge on the property they need agreement from Lender 1 .(i.e. Legally a Deed of Postponement)

alarmed

Thank you for the excellent advice as usual

Goldiegirl

A deed of postponement may also be required if you have a further advance on your first mortgage. The second charge holder's agreement is required, as their position could be adversely affected by the further advance.

They would need to sign a deed (or letter) of postponement to acknowledge that their charge ranks lower than the original mortgage and the further advance.