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Alex J.
Alex J., Solicitor
Category: Property Law
Satisfied Customers: 3497
Experience:  Two years conveyancing experience.
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I have a forst and second charge mortgage on my house

Customer Question

hello ,
I have a forst and second charge mortgage on my house plus a third and fourth as a rersult of defaulkts on a director's guarantee.
The second charge holder has reposessed the house and I am currently arranging a loan to pay them off. The third chargeholder is particularly aggressive as we were in dispute for some time.
My new lender wants to be put in the place of the second chargeholder effectively just replacing him. I am worried that the 3rd bchargeholder will not cooperate.
is there any way for me to make this happen without relying on the permission of the 3rd and 4th chargeholders? For excample, can we assign or novate the 2nd charge?
Submitted: 11 months ago.
Category: Property Law
Expert:  Alex J. replied 11 months ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
A novation is probably not necessary, because the charge is a benefit and not a burden to the charge holder. The security can probably just simply be assigned. There is no restriction on assigning the security interest, but the subject matter of what the security (i.e secures) would have to be the same - it would have to be the same loan.
Can the second charge holder also assign their loan to the new charge holder?
Kind regards
AJ
Customer: replied 11 months ago.
The second chargeholder is a bank the third is an individual, I have not asked the bank yet as I didnt want to rock the boat until I knew whether it was possible. Is this normal pracatice for banks?
Expert:  Alex J. replied 11 months ago.
Hi,
Thank you.
It is normally practice for banks to buy and sell debts among each other.
I suspect the bank being repaid will probably agree.
The actual process of agreeing an assignment is straight forward.
Can you tell me anything about the debt underlying the charge?
Kind regards
AJ
Customer: replied 11 months ago.
The bank obtained the charge to seciure a couple of business loans. when the company had to cease trading they called on the security and obtained an order for possession. There was a year between the court hearing and the order. Not sure why.
Expert:  Alex J. replied 11 months ago.
Hi,
Thank you.
Technically the new lendor would have to buy the debt from the old lender. You would not be able to use the charge to cover "fresh debt" unless the other charge holders agreed or the document contained an "all monies" charge.
Kind regards
AJ

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