Secure loan query

Mike8178

I have applied for a secure loan which is currently under consideration.
My current mortgage lender requested a Deed of Postponement. Not sure what is this ?
My question is can the current mortgage provider stop the loan if my new lender is happy to approve it ?

sourcrates

From the web :


A Deed of Postponement is an agreement between two lenders to agree to change or regulate the priority of rights and enforcement of security granted by the debtor in their favour.

Normally the Deed will provide that any payments are used first to pay off the debt owed to the senior creditor and then to pay off the debt owed to the junior creditor.

Both the debts are secured and include amounts due under the loan agreements. In effect the Senior Creditor has security over all the assets subject to security created by the junior security documents.

The Senior Creditor’s lawyers normally draft the Deed of Postponement which will be negotiated between the Senior Creditor and the Junior Creditors’ lawyers but the debtor will not be involved in negotiating such document.


Its just a legal term to come to an arrangement about who gets paid first.

Mike8178

Thank you but this does not really answer my question.
If someone knows whether this is a formality or it can affect the process I would appreciate it
Thanks,
Mike

Paul_DNAP

It is something of a formality, but yes it could affect your acceptance for the second secured loan if they came to the conclusion that there is not enough equity in the asset to cover security for both loans.

djphig

A DOP is required when you have a flexible element to your mortgage. The secured loan lender needs to know the "upper lending limit" that you could potentially borrow to, to work out the true Loan to Value. Usually a formality as others have said, however, it could work out that you have an upper lending limit that is higher than the LTV the new lender would go to. In which case, you could just look at a different lender who will allow a higher LTV.