Your lender will almost always register a charge at the Land Registry if you borrow money to purchase your home. Charges do not transfer ownership. The charge will grant the lender certain rights including the right to sell your house if you default.
Most people don’t give much thought to the way the lender will protect their interests when they borrow money to purchase a home. The creation of a charge on your property will have an impact on how you can manage it as the owner. If you lend someone money, say to help them get on the housing ladder to start a business, this can protect your loan.
What is a charge?
Charges are legal interests in property that the owner creates for a third-party (the chargee, or mortgagee). It is used to secure debts, usually a mortgage to purchase a home. Charges give the lender rights to the property. If the borrower cannot pay the debt, the lender can sell the house and use the proceeds.
The Land Registry now registers most land. In this case, for the charge to be legal, it must be registered. The charge is known as a registered charge.
Many lenders prefer registering a legal charge because it provides an official guarantee that the security is valid. For advice from Conveyancing Solicitors Gloucester, visit Dee and Griffin
What is the impact of a registered charge on me as a landowner?
It is not likely that the existence of a registered fee will affect your daily life, provided you adhere to your mortgage terms. Many standard mortgages prevent you from renting out your property without the consent of your lender. Certain statutory safeguards are in place, but failing your mortgage terms can put your home in danger.
You or your lawyer will have to deal with registered charges when you sell your property or refinance. You must first check the amount required to repay your debt. This amount will be due to the lender upon completion. Be sure to include this in your budget. Although it will depend on the lender, most mechanics are fairly straightforward. A solicitor who is familiar with the requirements of your lender can make sure that everything runs smoothly.
My title has a restriction at the Land Registry. Is this normal?
A lender will often restrict the borrower’s right to transfer property or to grant another charge. They may not want to deal with third parties or risk losing their security. This restriction prevents the registration or other charges without their consent.
