Unilateral second charge on my mortgage

by Readers Question

13:19 PM, 3rd January 2017
About 3 years ago

Unilateral second charge on my mortgage

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Unilateral second charge on my mortgage

My current mortgage arrangement ends in June 2017 which means I have to repay my lender, C&G.
The property was my sole residence until nearly 2 years ago when I had to move nearer my family (for health reasons). As I could not sell the house for an acceptable price I decided to let to tenants for a couple of years – which is acceptable to C&G. trump cards

I assumed the only way I could repay the mortgage was by selling the property but, to my surprise, I discovered I could get a BTL mortgage. I would prefer this as I have since retired and the rent I get is essential.

The title deeds to my property show 2 charges, the first being C&G. The second one relates to a loan of £30k (16.7% of value) which was made by a private individual towards the deposit when I first purchased back in 2003. We had a loan agreement drawn up by a solicitor. Despite that, the individual made a unilateral charge on my property.

THE PROBLEM: My understanding is that any new BTL lender will want to have first charge on the property and this would involve asking the individual to come off temporarily while the BTL lender is registered after which note of the minor lender’s interest is returned to the title deeds.

Do I have any legal redress if he refuses to do so, thus preventing me from getting the BTL mortgage?

This is not an unlikely scenario because when I had to restructure my finances in 2008 the individual concerned did precisely that, insisting that he wanted his loan repaid. Then, as now, I do not have the money to repay his loan which is now over £50k with interest – which means I would be forced to sell the property – even though it would not be to my financial benefit.

The only reason he was forced to back down in 2008 is because the value of the property had dropped heavily and I was in negative equity; there was not enough to cover his loan after the mortgage had been paid. That is not the case today.

Does anyone know if he can force this sale? Can it really be acceptable as fair that he, with his minority interest of just 16.7 %, has this amount of control?

I would welcome any comments and/or suggestions of a solicitor that has experience of this sort of thing.

Sandra



Comments

Sandra Pomeroy

15:13 PM, 6th January 2017
About 3 years ago

Reply to the comment left by "H B" at "05/01/2017 - 21:17":

Thank you for your detailed reply. Much to mull over. Ref another mortgage. I'm now 65 - do you think I could get another mortgage at my age? As you say, I could put down nearly 30% deposit.

Dylan Morris

16:44 PM, 6th January 2017
About 3 years ago

Reply to the comment left by "Sandra Pomeroy" at "06/01/2017 - 15:13":

Can't see your age being a problem as most BTL lenders will consider max age of 75 years with quite a few being more flexible lately and going to 80 or even 85 years now. Of course on interest only the term does not affect your monthly repayments. Some lenders require a minimum income (of say £25k) others do not. Good luck.

Howard Reuben CeMap CeRER

11:50 AM, 7th January 2017
About 3 years ago

To be blunt, I would suggest that your friend has patiently, and very generously, waited long enough. 65 is not too old to refinance the property and as long as the rent is sufficient enough, you could possibly raise enough on to a new 'consolidation' BTL mortgage to pay your friend back and then own the property without his charge hanging over you any longer. If he had invested his £30k elsewhere, he might very well have had a much more significant return, so maybe it's now time to cut the tie and simplify matters?

Puzzler

16:51 PM, 8th January 2017
About 3 years ago

In fairness to your friend, the solicitor probably arranged the charge. It is standard practice.

To HB: the term is probably age-related. In 2003 retirement age was the standard limit for most mortgages.

H B

18:39 PM, 8th January 2017
About 3 years ago

Reply to the comment left by "Puzzler " at "08/01/2017 - 16:51":

Good point

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