Questions and Info relating to Property Issues inc, Charging Orders and Repossession

Moderators: TalbotWoods, JaneClack

ByRaptor
#468863 Hi I'm new I intend to do an intro shortly but first I am in urgent need of some advice.

I'm currently selling my home and we have a buyer, its currently going through the normal process however I have a secured loan from 2007
on the property and when I called the loan company before we decided to sell we were advised that the loan was transferable so far so good, now it transpires that it is not and they apparently can block the sale of the house! I'm just wondering firstly is this true and is it because we wont have mortgage on the new property initially? so they have nothing to transfer it to?
If so are they any ways round it so we can carry paying the loan in instalments rather than paying off the balance? As they want us to do now.
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ByTalbotWoods
#468883 Hi and welcome

Basically who ever advised you is somewhat off the mark, however, there are some circumstances where you can which I will cover in a moment.

As a rule if you have a secured loan, unless it states otherwise in your agreement documents, then you cannot sell without permission of the lender.

I know you are offering to continue once you have sold, whist waiting for the new property, and then you are happy for the lender to get a new charge, but unfortunalty the lenders do not look at it this way. To them there is a risk you can sell up and then clear off abroad, which has happened in the past, or didn't get a new property so the loan is unsecured, and avoiding pay what is due to them, again this happens and unfortunately this one is quite common.

I am sorry but as a rule unless when you sell the sale price covers both the outstanding mortgage AND the charge held by the loan company, then they can and do routinely refuse.

However, you MUST read your agreement, some do contain the option to convert to an unsecured loan on selling (always with their permission first).

If the sale of the property covers the mortgage, then sometimes depending on the terms of the mortgage and the agreement, then the mortgage company can force an overreaching sale.

There is another aspect to this, when the buying solicitor finds the charge, they will want written confirmation from the lender that they are happy for you to sell. If they do not get that (and usually directly from the lender and not you) they will advise their client and their mortgage lender not to proceed.

There are a lot of people out there at the present time that are stuck in houses they cannot sell due to 2nd Charges, and until the equity improves they are having to keep the property.

But first things first, you MUST read your agreement to see what is says about selling, especially if they allow it and under what circumstances. Then you MUSTY talk to the lender to agree terms with them, remember all they are interested in is protecting their outlay

Tim
ByRaptor
#468933 Thanks Tim for responding and your information, their T & C's do not state it cannot be ported but there again it doesn't state it can't either in fact there is nothing in them referring to the sale of house whatsoever! so can I use that as an argument to get them onside? Bottom line is what can I do to avoid having to pay the outstanding balance right now in one hit? The new property has already been bought and there is no mortgage on it at present therefore isn't the the loan co position strengthened because there's will be the only charge on it?
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ByTalbotWoods
#468973 Just a little confused how you will not effectively have a mortgage to start with on the new property.

This implies you would be buying it outright, so they would have the asset by which to secure the loan to.
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ByJaneClack
#468983 Basically if the new property is bought outright then they will only consider the sale if the charge is paid off. What will you be doing with the sale proceeds or have I misunderstood something?

Unlike a secured loan where the first mortgagee can overreach the secured lender and insist on a sale to ensure they get their money back, they cannot do this with a charging order!!

I have never heard of them porting a charge but I have heard of mortgage shortfalls being secured on a property later bought by the original mortgage holder.
ByRaptor
#468993 Hi Tim & Sarah

Sorry yes it has been bought outright, our savings plus family investment.
The proceeds of the sale will be paying off the original mortgage, renovation of the new property and then paying back family but if the loan company enforces the charge to repaid in full now it will leave us unable to renovate which obviously isn't ideal.
I just don't understand why the loan company can't secure it onto the new property they will have in effect first charge so will be in a better position??
The really annoying thing is we asked the question whether we can do this before we bought and they said it was transferable but they are denying this now, whether they thought there was a mortgage which is understandable as that assumption is usually correct but I remember they didn't ask the question otherwise I would have told them.

Anyway at the end of the day do you think we have no chance of getting them to agree with us and carry on making instalment payments secured on the new property?
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ByJaneClack
#469023 It will be totally at their discretion I am afraid. They have the legal right to take the money when the house is sold before any completion.

Basically they want the money in the short term you see.
ByRaptor
#469033 Thanks again Sarah.

Ok they have a legal right so it seems my only option is to try to get them 'onside' by showing them how much interest they'll be missing out by forcing us to redeem early.
So I'm clear in my understanding when you say before any completion surely that means on completion as its' bad enough I have to pay up the balance in one hit let alone before the house is actually sold and monies received?
ByRaptor
#469093 Thanks Sarah for clarifying and your time in answering.
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