Two mortages - one property

peteuk

Hi

We have a larger and smaller mortgage on our property, and the larger one is coming to the end of the fixed rate.   I have been told that to change the mortage the smaller one will become the first mortgage and the new one will become the second.

To sort this out we have been advised we will need a solicitor, does anypne have any  ideas of their charges?

silvercar

Same lenders or different? If they are the same there is no issue.

Assuming different lenders. If you need the larger mortgage to remain the first mortgage, you either need to transfer to a new deal with the existing lender or with a new lender you would need to arrange for the smaller mortgage lender to agree to a ‘deed of postponement’ to put them back into second place. The solicitor that acts for the lender in sorting out the paperwork for the new mortgage could do this for you, it would be less hassle than arranging a separate solicitor. You could also use the opportunity changing the first mortgage to combine the two, either by going with the lender of either mortgage or a third one that would take over both amounts.

penners324

Is it 1 mortgage with 2 parts (the most likely) or 2 mortgages with different lenders (very unlikely)

peteuk

It’s two mortgages with different lenders.  First was taken out to purchase the house, the second some years later for repairs.  The second is a loan against the house, rather than a traditional mortgage but adviser mentioned it wil become the first mortgage of the two.

I have a settlement figure which I can pay due to inheritance so I think that might be the easier way.

silvercar

peteuk said:

It’s two mortgages with different lenders.  First was taken out to purchase the house, the second some years later for repairs.  The second is a loan against the house, rather than a traditional mortgage but adviser mentioned it wil become the first mortgage of the two.

I have a settlement figure which I can pay due to inheritance so I think that might be the easier way.

So one is a mortgage and the other a secured loan. A mortgage is just a fancy way of saying a secured loan, but it would generally be assumed to be the first charge on the property ie the first registered secured loan.

As I wrote previously, if you pay off the mortgage (=first registered secured loan), the  (2nd) secured loan gets promoted to first place. The (2nd) secured loan needs putting back in its place behind the new mortgage and a deed of postponement is what does that. The order matters because it is the order that the loans are repaid in the event that there is eg a repossession and there isn’t enough money to repay all loans. It’s also necessary to maintain the correct order because mortgages have a lower interest rate than secured loans, because the mortgage offers the lender greater security.