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Ask Buachaill Your Own Question
Buachaill, Barrister
Category: Law
Satisfied Customers: 10953
Experience:  Barrister 17 years experience
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My buyer of my house is unable to find the purchase the balance

Customer Question

My buyer of my house is unable to find the purchase the balance of the purchase monies to complete the transaction.
We have agreed that I will lend him the balance secured by a private mortgage for a period of 30 years with monthly payments and interest at 5% above base rate.
The mortgage will be secured by a first legal charge against the property.
Can you please confirm if I will have my full rights and remedies to enforce a sale and recover my money and interest in the event of default.
Submitted: 3 years ago.
Category: Law
Expert:  Buachaill replied 3 years ago.

1. Yes, if you have first legal charge, you will have full legal rights to enforce a sale in the event of default in the mortgage. A first legal charge gives you priority over all other encumbrancers to seek to sell the property if you so wish. The right of sale will be inherent in having the first legal charge. I would advise you, however, to seek the services of a solicitor to draft the mortgage and charge documentation and to register the charge in the Land Registry. There are certain essential legal requirements such as registration in the land Registry which are necessary in order to protect your position against any third parties should the borrower even incur other debts. So just make sure the job is done properly before you go ahead with it, as you don't want adverse consequences in the future.

JACUSTOMER-ugu3kug8- :

Thank you would you please confirm if there is any problem in charging the higher interest rate of 5% above base. Will this still be enforceable or does this contravene the consumer credit regulations?


2. No, 5% over base is a perfectly acceptable rate of interest. The interest rate would need to be extortionate to be unenforceable. This (5% over base) is the sort of interest rate lenders charge to borrowers who don't have perfect credit records, so it is very competitive given the facts.