Can a second charge be for a percentage of the property?

KF1500

We're buying a holiday flat with 3 family members. The mortgage needs to be in my husband and my names as we are the higher earners but the five of us will each put in 20% of the deposit and ongoing mortgage repayments. We wish to properly document and secure the other family members' rights in the property. The mortgage lender won't accept a declaration of trust setting out this arrangement but has said it would accept a second charge on the property. Is it possible for the second charge to be for a percentage of the value of the property or must it only be for the set amount that is given (e.g. for the deposit)? Or does anyone know of a better way to do this, either before or after completion? All help gratefully received as it's proving really tricky to get proper information, even from their solicitor!

getmore4less

You can't have 5 legal owners that would have to be a trust.

Not sure a lender can stop you having trust deed describing the beneficial ownership.

Who are they suggesting puts on the second charge?

I would probably go with the second charge for the 3 extra deposits and do a trust deed anyway.

The charge stops the legal owners selling without the third party getting involved, the trust deed the beneficial interests.


The trust deed needs to cover the can't pay, won't pay, overpayment,and things that trigger a sale.

As a holiday home you probably want to add additional terms covering costs etc.

KF1500

Thank you, that's very helpful.

My husband and I will be the 2 legal owners. So it sounds the best thing is to do a 2nd charge to cover the deposit money from the other 3 and then draw up a trust to cover ongoing monies in. With the trust, is that something you can bequeath? My dad (one of the family members) will be contributing a fair amount of his monthly money and so wishes that he is able to leave his beneficial interest in his will to grandchildren. Previously we were advised to do a declaration of trust but he would only then get his money if my husband or I predecessed him. Sorry for the further questions! Thanks again.

AnotherJoe

I have a second charge for 50% of a property rather than an absolute value, so i dont see why not.

KF1500

That's really helpful, thank you! My parents' solicitor told them it wasn't possible to have it for a percentage and that you had to have a set amount.