who can place a charge on a property?

[maybelline]

I read somewhere (cant find it now) that only a qualified solicitor can place a charge on the register of title to a property, is this correct and when I say charge I do not mean the kind given by a Court, just secured loan. also, is it actually necessary to place this on a title deed if only a secured loan (of less than 25k)?

 

if any legal types can help would be appreciated:)

[patrickq1]

only a secured loan (of less than 25k)? this is what i have on my thread may my charge is under the MORGAN STANLEYVHFO thread i have put my contract in their for peeps to cast a more knowladgable eye over mine but to dat i am waiting for it to be looked at ,so sadly i cant help but it will be interesting to hear replies

patrickq1

[un1boy]

May, a secured loan acts in the same way as a mortgage in that the laon is secured on your property in the form of a charge - placed on the title deeds by a legally qualified solicitor.

 

Secured loans are basically mortgages too, called "second" mortgages.

 

The way the charge system works is that all chargees are tiered - if you have a mortgage they are first charge, then you get a secured loan and they are second charge.

 

If the property gets repossed, any money paid for it will first be used to pay the balance of the first charge (mortgage), then if there is still any money left, the second charge (secured loan) and the the third, fourth, five charge (if applicable). Once all the chargees are paid, you get the remaining balance if there is any. If there is none left after the first charge is paid then no one else gets their money.

 

The reason interest rates are high with secured loans is because they are not necessarily guaranteed to get their money back. The secured loan company have to get permission from the chargees above them to secure a charge as well.

 

I hope this helps!!

[maybelline]

thanks thats very helpful, another question, should I have a copy of the 'instruction' or whatever form it should take, I imagine they do not just ring them and say, oh by the way, can we have a second charge and then to land registry similarly?

[un1boy]

I would assume that you have to give your consent - your mortgage company should have sight of this and so shoudl the solicitors.

 

Otherwise, I (or anyone else) could get a secured loan on your property and you would never know!!!

[maybelline]

well yes, any alleged secured loan I suppose would give permission but I did know that a person taking out such a loan would actually involve recording something on to the title deed in the form of an instruction, since one does not use a solicitor to take out a secured loan, are they then instructed by the creditor to contact land registry.

 

this 'placing' is the thing I was after?

[un1boy]

well yes, any alleged secured loan I suppose would give permission but I did know that a person taking out such a loan would actually involve recording something on to the title deed in the form of an instruction, since one does not use a solicitor to take out a secured loan, are they then instructed by the creditor to contact land registry.

 

this 'placing' is the thing I was after?

 

My understanding is that the secured loan company use a solicitor to place the charge on the property.

[Helford]

Un1boy,

 

To clarify a point above. Up to and including £15000, a 'second charge' finance company does NOT need to get the permission of the principal mortgage company.

 

Just gone through this personally. My mortgage service company denied me the ability to secure a second charge for more than this figure as I have had arrears in the last 3 months on the mortgage account. Millstone Mortgage Services of High Wycombe are certainly not my Preferred mortgage Company! Lol

 

Had to reduce my further borrowing and plough ahead! Heyho.

 

H

[un1boy]

Great, thanks for clarifying Helford - I'm no expert on this.

 

Sorry for the problems you have experienced.

[rory32]

The following link may be of some use Mortgages of land

[Aequitas]

I think there is some confusion here.

 

 

A “secured loan” is simply a loan that is secured. The security does not necessarily have to be land. It can be shares, an interest under a trust, the goodwill of a business or a painting. Of course when finance companies advertise “secured loans” they expect that the security will be land.

 

 

When it comes to land, there is in theory a distinction between “mortgages” and “charges”. A mortgage gives the lender an interest in land, but a charge only gives rights. (In fact, all mortgages are charges, but not all charges are mortgages.) In the context of what is being discussed in this thread, all charges and secured loans are mortgages.

 

 

The word “mortgage” is used to mean:

 

 

1. A type of security - “I have a mortgage on my property.”
   
2. The deed executed to create such a security - “My solicitor has sent me the mortgage to sign.”
   
3. The loan itself - “I am applying for a mortgage.”
   

 

Virtually all mortgages of land are “charges by way of legal mortgage”, usually shortened to “legal charge” and often simply referred to as “mortgage”. So, a first mortgage (typically to a building society or bank and usually called “a mortgage”) and a second mortgage (typically to a finance company and referred to variously as “a second mortgage/charge” or “a secured loan”) both create exactly the same type of security – the only distinction between them being the question of which has priority.

 

 

Whether the consent of the first lender is required before you can create a second mortgage depends not on the amount owed to the first lender or the amount to be borrowed from the second lender, but on whether the terms of the mortgage to the first lender require consent to be given.

 

 

All that is required to create a mortgage is to sign a mortgage deed. Additionally, for the mortgage to take effect as security it may need to be registered. There is no need to employ a solicitor either to draw up the mortgage or register it, though only a solicitor (and certain other professionals) may charge a fee for doing so. In practice, all commercial lenders employ professional conveyancers or have their own legal department to ensure that everything is done properly.

[maybelline]

all very useful thanks:)