ChatterBank1 min ago
2Nd Charges
Iam in position to buy my parents house on a buy to let mortgage
however I have come across a 2nd charge on property
To pay it would put house into negative equity situation
Can I still get a mortgage without fulfilling the 2nd charge
however I have come across a 2nd charge on property
To pay it would put house into negative equity situation
Can I still get a mortgage without fulfilling the 2nd charge
Answers
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. practically speaking if there is a charge on a house then a mortgage company shies away from granting a mortgage A way out may be to agree to indemnify the first charge - that is agree to pay if the creditor demands it
19:57 Mon 13th Oct 2014
You will have to ask the mortgage company but I can't see why they are going to say yes.
A second charge means either the property owner took a secured loan for another person, secured against the asset, or the owner has incurred a debt that the debtor has had registered against the property.
It isn't obvious why you want to do this transaction anyway.
A second charge means either the property owner took a secured loan for another person, secured against the asset, or the owner has incurred a debt that the debtor has had registered against the property.
It isn't obvious why you want to do this transaction anyway.
You can't do this. The second charge is a charge against your parents (or one of them). The holder of that charge can refuse to allow a sale without the charge being paid off. Your parents could apply to Court for it to be sold without the agreement of the second charge holder, but I suspect the judge would want to be given a very good reason before agreeing.
If it was agreed, the sale proceeds would go first to paying off your parents mortgage with whatever is left over going to reduce the debt to the second charge holder. The remaining part of that debt would become an unsecured debt owed by your parents to the firm which had had the second charge.
You could attempt to negotiate with the second charge holder on the basis that the remaining unpaid part of the debt would become a debt owed by you rather than your parents, & would be placed as a second charge on the house once it is in your name. I would not advise this - it is never a good idea to take on someone else's debt!
As you can see, none of this is anything to do with whether you can get a mortgage. Any mortgage you get will have to be a first charge. The only possible interest a mortgage lender should have is if you agreed to make payments on the second charge debt - they would want to be certain that doing so would not adversely affect your ability to pay the mortgage.
If it was agreed, the sale proceeds would go first to paying off your parents mortgage with whatever is left over going to reduce the debt to the second charge holder. The remaining part of that debt would become an unsecured debt owed by your parents to the firm which had had the second charge.
You could attempt to negotiate with the second charge holder on the basis that the remaining unpaid part of the debt would become a debt owed by you rather than your parents, & would be placed as a second charge on the house once it is in your name. I would not advise this - it is never a good idea to take on someone else's debt!
As you can see, none of this is anything to do with whether you can get a mortgage. Any mortgage you get will have to be a first charge. The only possible interest a mortgage lender should have is if you agreed to make payments on the second charge debt - they would want to be certain that doing so would not adversely affect your ability to pay the mortgage.
oops sorry reacting slowly
this came up ina discussion many years ago
A house was found to have had an unpaid mortgage on it from 1952 (!)
and this rendered it virtually unsellable and unmortgageable
and a third pary said ah right ... it is after all this time unlikely to be claimed and so the solution is to say that you would pay ( = indemnify ) if the mortgagor appeared.
this came up ina discussion many years ago
A house was found to have had an unpaid mortgage on it from 1952 (!)
and this rendered it virtually unsellable and unmortgageable
and a third pary said ah right ... it is after all this time unlikely to be claimed and so the solution is to say that you would pay ( = indemnify ) if the mortgagor appeared.
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