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A First Charge is a mortgage that has the first claim (or "lien") over the property offered as security in the event the borrower defaults on their contractual repayments.
So here we take a look at the First Charge Mortgage and how it works by way of example and offer details of how we can help!
Table of Contents:
So what is a First Charge? Well as we mentioned in the introduction a First Charge (or First Mortgage) is a mortgage that has the first claim (or "lien") over the property offered as security should the borrower happen to default on their contractual repayments.
The first charge takes the form of a Legal Charge document and this is registered at HM Land Registry. Other secured borrowings, by way of second and subsequent charges, will rank after the first charge if the property is repossessed.
Because a first charge will, in the case of foreclosure, rank above all other liens (claims), lenders will usually offer a more competitive rate of interest than those available on subsequenet charges.
How does the first charge work then? Well, let's look at an example:
| Sale Price: | £145,000 |
|---|---|
| Less: Hightown Building Society first charge: Mortgage Balance: £114,000 Legal & Sale Costs: £6,000 |
£120,000- |
| Less: The Derby & Leicester Finance Company redemption: | £14,000- |
| Balance to Customer | £11,000 |
In this case, the funds realised from the sale of the property were sufficient to repay both the first charge and second charge secured over the property.
Consider the situation if the mortgage was sold at auction, and didn't realise its expected price:
| Sale Price: | £125,000 |
|---|---|
| Less: Hightown Building Society first charge: Mortgage Balance: £114,000 Legal & Sale Costs: £6,000 |
£120,000- |
| £5,000 | |
| Less: The Derby & Leicester Finance Company redemption: | £14,000- |
| Shortfall on The Derby & Leicester Finance Company account: | £9,000- |
| Balance to Customer | £0 |
So, as you can see in this example, only the holder of the first charge (the Hightown Building Society) was able to collect their full indebtedness from the proceeds of the sale.
Usually yes we can! No problem.
However, if you do have difficulties with mortgage arrears, and your lender is threatening repossession proceedings, you must act quickly!
If you find yourself in this position, please contact one of our qualified mortgage advisors urgently. We'll then discuss the options open to you, and naturally we'll carefully assess your circumstances, and come up with a rapid in-principle decision for you.
You'll find our service to be friendly, professional, and helpful. So please don't hesitate to contact us if you would like to discuss your requirements, naturally without obligation. Our mortgage experts are available on Freephone 08000 282 281 until 10.00pm everyday (including the weekends), or alternatively why not enquire online at any time, and we'll be delighted to help in any way we can - whatever your circumstances!
Hopefully we've managed to shed a little light on the First Charge Mortgage for you and have answered any initial questions you may have had. Remember we're only ever a free phone call or couple of mouse clicks away and would be delighted to hear from you!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.
