PBL35 Gone Live

A second charge does provide adequate and unequivocal security to investors.

The crucial point for investors is to ensure that the first charge lies with a reputable institution and that the loan to value leaves a residual equity in the property sufficient to redeem the debt to Lendy in the event that the loan falls in to default.

A second charge sits on the title to the property at Land Registry, and gives Lendy the same rights as a first legal charge in terms of taking possession and recovering the debt. A first chargee will take priority to a second lender, and so if both charges fall in to debt, the first chargee can take control of possession and sale. It is important therefore to ensure there is sufficient equity available when you take the second charge to ensure that both chargees can be redeemed in full (in addition to costs and fees).

A deed of priority will often be required by the first chargee to ensure that they have control of proceedings in the event of default. This will include a headline figure which will cap the liability to the first chargee, thereby giving Lendy (as second chargee) confirmation as to the size of the equity remaining in the property. We are able to recommend a second charge as security, provided the due diligence is undertaken on values and the ability to sell.

In the case of Ryedale, there is more than sufficient equity in the property, and the estate represents good and marketable security for a second charge (pending completion of our due diligence).