Secured borrowing - mortgage company will not allow

oneposhbird_2

Hi I wonder if anyone can help. I am wanting to purchase a business and have been given the opportunity to pay for the business over a 10 year period by the vendors, understandably they would like some form of security. I have approached my mortgage lender, First Direct, who have advised they do not agree to second charges on their mortgages and never have done. Can anyone tell me if there is another way of setting up security without having to involve my mortgage lender. Many thanks

DevCoder

No. First direct have first charge over the property. If they do not allow second charges to be placed then its the end of that route of secured borrowing.

oneposhbird_2

I was thinking a possible solution is to re-mortgage to someone who will accept a second charge. Any suggestions?

jonesMUFCforever

I don't know if there has been a misunderstanding here but First Direct cannot say that they do not allow second mortgages.


A second mortgage is only of any value if there is sufficient equity in the property if you have to sell so the second lenders are taking all the risks.


I wonder if First direct have got hold of the wrong end of the stick and they think that they are been asked to become behind the second mortgage??


Any body can put a charge on a property - it will not affect the first charge holder at all.
Why did the second lender ask First direct - just go and do it.

oneposhbird_2

It will be a second charge and First Direct do not allow them.

dealer_wins

Two different oneposhbirds??

DevCoder

JonesMUFC : The first direct T&C's state

1.
b) Your loan facility is secured by a mortgage over the Property, (which security will be a first and only charge over the Property unless we agree otherwise).

DCFC79

dealer_wins wrote: »

Two different oneposhbirds??

Your on the ball dw

jonesMUFCforever

krisdorey wrote: »

JonesMUFC : The first direct T&C's state

1.
b) Your loan facility is secured by a mortgage over the Property, (which security will be a first and only charge over the Property unless we agree otherwise).

Legally is that enforceable?
It makes no odds who is 2nd 3rd 4th in line etc it will not make any difference to First direct's position in a default or sale scenario.

DevCoder

Legally its enforceable, if you breach the T&C they can call the mortgage in.

They can dictate the terms, refusing second charges without their agreement is not illegal or unfair. Whilst second charges may not affect the first charge you agree to abide by their T&C when you sign them.

Of course, if you are looking for secondary charges etc then just move to a mortgage provider that doesn't prohibit them. Although once you get to the stage of requiring a second charge, your mortgage lenders scope is probably becoming quite limited.

DevCoder

There is an interesting FCA consultation paper CP14/20, regarding second charge mortgages but its not due until 2016.

http://www.fca.org.uk/news/cp14-20-mcd

This could be what First Direct had the vision to protect against.