Approx how much to set up a charge on a house, IE loan to children/family.

diystarter7

My sister has been telling me about loaning around 100 to 15ok cash to her son who is married and has a property.
The mortgage was about 350k taken out about 4 years ago and the fix comes to an end in about 10/11 months.

The property value is approx 650k (I've done my own research and I think that is a conservative figure.
The outstanding mortgage is about 250k now

My sister was just thinking of loaning the money but I opened up her eyes and told her of the risks that may be beyond her son's control so
needs some sort of guarantee.

The loan is interest from for about 5/7 years undecided atm.

Has anyone put a charge on a family member's property nd how much did it cost?

I've warned my sister that there may be delays getting her money back even after the 5/7 years until they sold their property.

Her son intends to pay her back before the 7 by selling his property in Spain which ATM is valued at around 300k. (I've looked up the proerty and two recently sold there for just above that so atm a fair and honest valuation)

Sis is more aware of the pitfalls and I've warned her to only loan money she could withstand losing or delayed access. 

Thanks.

diystarter7

Btw, will there be any additional costs when the loan is repaid and charge removed? How does a charge removed work - is it more money to a solictor and if so how much atm.

diystarter7

Anyone? Thanks.

martinbainbridge1975

diystarter7 said:

Anyone? Thanks.

Not sure on the costs but where I would start initially is if you have a legal cover on your house insurance, that gives access to a legal helpline.

Before you go shelling out any cash this might be a decent place to start to get an idea of the exact process to follow

TripleH

The other issue is if there is a mortgage on the house as well I would think you need the lender's permission for a second charge and then your sister would have to wait until the lender has gotten their money out.

Plus when it comes to remortgaging, this second loan will be factored in to your nephew's affordability so he might get worse borrowing terms.

sourcrates

The fee`s vary, according to house value, you would need what is known as a "voluntary 2nd charge".

The land registry website gives more detail, as does the .Gov site.

Most things to do with housing/legalities etc, requires the services of a solicitor.

Twixty3

That a lot of money to loan to the son who has two homes. Why can the Spanish property not be sold now?  it could be worth less in 7 years as the hosing market does not always work the way we wish it to. 

Do you think the loan is really needed?

diystarter7

Thanks all.

longjohnjohnson

What's the point of having a second charge when the owner of the first charge won't agree to sell?

Having a second charge is utterly meaningless and I'd strongly advise against it if you want your money back.