A practical guide for homeowners, buyers and family lenders dealing with mortgages, private loans and other security registered against property.
If you have a mortgage, your lender will usually have a registered charge recorded against your property at HM Land Registry. The charge provides the lender with security for the money you owe.
A registered charge does not mean that the lender owns your property. You remain the registered owner, but the lender acquires legal rights over the property if the loan is not repaid or the mortgage conditions are breached.
Registered charges are not only used by banks and building societies. They may also be used where a family member lends money towards a property purchase, where a private lender advances funds, or where borrowing is secured against a property that is already owned.
Understanding what a charge means can help homeowners, buyers and lenders avoid difficulties when selling, remortgaging or trying to recover money.
At a glance
A registered charge gives the lender security. It does not transfer ownership of the property to the lender.
Your conveyancer must check charges and associated restrictions before a sale, remortgage or transfer can complete.
A family loan is not the same as a gifted deposit and should be disclosed and documented properly.
What is a registered charge on a property?
A registered charge is a form of legal security over a property. It is commonly created when someone takes out a mortgage, although it may also secure another type of loan.
The person borrowing the money is responsible for repaying it in accordance with the loan agreement. The charge gives the lender security over the property and may allow the lender to take enforcement action if the borrower defaults.
A legal charge over registered property must be registered at HM Land Registry to take effect as a registered legal charge. HM Land Registry commonly uses the words charge and mortgage deed interchangeably.
Where does a registered charge appear on the title register?
Most HM Land Registry title registers are divided into three sections.
Describes the property and may include rights that benefit it.
Records the registered owner and commonly contains restrictions affecting dealings with the property.
Usually records mortgages, registered legal charges and other interests that burden the property.
A mortgage or registered legal charge will usually appear in section C. This section may show the date of the charge and the name and address of the lender. It will not normally show the current mortgage balance or the precise amount outstanding.
Restrictions will usually appear in section B. These may limit the owner’s ability to sell, transfer or grant another mortgage unless particular requirements are met.
A copy of the title register can be obtained through HM Land Registry’s property information service. A solicitor can also obtain and interpret the register for you.
How does a registered charge affect me as a property owner?
A standard mortgage charge should have little effect on your everyday use of the property, provided that you comply with the mortgage conditions.
The charge becomes particularly important when you:
- Sell the property
- Remortgage
- Transfer ownership
- Add or remove an owner
- Borrow further money secured against the property
- Repay the mortgage
- Separate from a joint owner
- Lend money to a family member buying the property
Your solicitor will need to examine the charge and any associated restrictions before completing a transaction.
Can I sell a property with a registered charge?
Yes. Most mortgaged properties are sold while a registered charge remains on the title.
Before completion
Your conveyancer will request a redemption figure from the lender. This confirms how much must be paid to clear the mortgage on the proposed completion date.
The figure may include interest, early repayment charges or administration fees.
On completion
Your conveyancer will normally repay the lender from the sale proceeds. The lender will then provide or submit the discharge needed to remove the charge from the title.
A problem can arise where the sale price is not sufficient to repay all charges and associated costs. This should be identified as early as possible.
Can a registered charge delay the sale of my property?
Yes. A registered charge can delay a sale if the title does not accurately reflect the current position or additional consent and evidence are needed.
A sale may be delayed where:
- A mortgage that has already been repaid remains on the title
- An old lender cannot easily be contacted
- The lender’s name has changed
- There is more than one charge
- A restriction requires consent or a certificate
- The redemption figure is disputed
- The sale proceeds will not repay all secured lending
- A private or family charge has not been properly documented
- The charge relates to a dissolved company or lender
Before placing a property on the market, it can be sensible to ask a conveyancer to check the title register, particularly if you know that an old mortgage or private loan should have been removed.
Selling, buying or remortgaging?
Our Residential Conveyancing team can review the title, deal with registered charges and restrictions, request redemption information and explain what must happen before completion.
What happens when I remortgage or repay the mortgage?
Remortgaging
When you remortgage with a different lender, the existing mortgage will normally be repaid using funds provided by the new lender.
The existing charge must then be discharged and the new lender’s charge registered. Your conveyancer will also check any restrictions and ensure that the new lender receives the priority it requires.
Where an existing second charge, equity loan or private charge is continuing, consent or a deed changing the priority of the charges may be necessary.
Removing a charge after repayment
Repaying a mortgage does not always result in the title register being updated immediately.
Many institutional lenders submit an electronic discharge directly to HM Land Registry. An e-DS1 acts as both evidence that the charge has been discharged and the application to remove it from the register.
After repayment, retain the lender’s confirmation and check that the title has been updated, especially before selling or remortgaging.
Where a charge remains after the debt has been repaid, a conveyancer can investigate what evidence HM Land Registry requires to remove it.
Can there be more than one registered charge on a property?
Yes. A property can have a first charge, second charge and, in some cases, further charges.
A homeowner may take out a second charge to secure additional borrowing. A family member may also seek a charge to protect money contributed towards a purchase.
A first mortgage lender may prohibit further secured borrowing or require its written consent before another charge is registered.
Registered charges normally rank according to the order in which they are entered in the register, unless the register records a different arrangement. Lenders may agree to change their respective priorities through a deed of priority or postponement.
What happens if property prices fall?
If the property is sold and there is not enough money to repay every secured lender, the lender with the highest priority will normally be paid first.
A second or subsequent charge holder may receive only part of what is owed, or nothing at all, depending on the sale price, mortgage balance, costs and agreed priority arrangements.
Second charge lenders will usually consider:
- The property’s value
- The existing mortgage balance
- The amount of available equity
- The borrower’s ability to repay
- Whether the first lender consents
- How the charges will rank
The borrower may also remain responsible for an unpaid balance, depending on the loan agreement and circumstances.
Is a gifted deposit the same as a family loan?
Gifted deposit
A gifted deposit is normally money given without any expectation that it will be repaid.
The person making the gift should not ordinarily acquire an ownership interest or security over the property.
Family loan
A family loan involves an expectation of repayment. It should not be described to a mortgage lender as a gift if repayment is expected.
Where the buyer is obtaining a mortgage, the proposed family loan must be disclosed. The mortgage lender will decide whether it is willing to proceed and how the family loan may be protected.
Can I lend money to a family member and register a charge?
Potentially, yes. For example, a parent may lend money to an adult child to help them buy a home. A registered charge can provide stronger protection than relying on an informal understanding between family members.
The arrangements should normally be documented before the money is transferred.
The documentation can address:
- The amount being lent
- Whether interest is payable
- When repayments are due
- Whether payments can be deferred
- What happens when the property is sold
- What happens if the borrower separates from a partner
- What happens if either party dies
- What constitutes default
- Whether the lender can require repayment
- The priority of the family charge
- What happens if the property falls in value
The loan agreement records the detailed repayment terms, while the charge provides security over the property.
The borrower and family lender may need separate legal advice, particularly where their interests could conflict.
Can a charge be registered against jointly owned property?
A legal charge over the whole registered title will normally require all registered proprietors to participate in the arrangement.
One joint owner cannot usually grant a legal charge over the entire registered title without the involvement of the other registered owners.
Where a debt or court order affects only one joint owner’s beneficial interest, it may instead be protected by a restriction. The correct approach depends on the ownership structure, the nature of the debt and the existing register entries.
Advice is especially important where the owners have unequal financial interests or where only one owner is borrowing the money.
What is the difference between a charge, restriction, notice and charging order?
| Entry | What it generally does | Where it may appear |
|---|---|---|
| Registered charge | Provides legal security for a mortgage or other loan against the property. | Usually the Charges Register. |
| Restriction | Prevents HM Land Registry registering certain transactions unless stated conditions are met. | Usually the Proprietorship Register. |
| Notice | Protects the priority of a third party’s interest affecting the property. | Commonly the Charges Register. |
| Charging order | A court order used to secure a judgment debt against property or a beneficial interest. | May be protected by a notice or restriction. |
A notice or restriction does not itself guarantee that the underlying interest is valid. Its purpose and effect depend on its wording and the circumstances in which it was entered.
What should I do if there is an old or unexpected charge on my property?
Do not ignore it, particularly if you are planning to sell, transfer or remortgage the property.
Your conveyancer can:
- Obtain an up-to-date title register
- Identify the lender or charge holder
- Check whether the secured debt was repaid
- Contact the lender or its successor
- Obtain the appropriate discharge
- Address any related restriction
- Advise on evidence required by HM Land Registry
- Establish whether the entry relates to a mortgage, private loan or charging order
Historic entries can take time to resolve, so it is usually better to investigate them before a transaction is underway.
How can Watkins Solicitors help?
At Watkins Solicitors, our experienced Residential Conveyancing team advises homeowners, buyers, borrowers and property investors on matters involving registered charges.
We can assist with:
- Buying or selling a property with an existing mortgage
- Remortgaging
- Registering a new mortgage
- Dealing with second charges
- Private and family lending arrangements
- Releasing a charge after repayment
- Investigating historic charges
- Complying with restrictions
- Transfers of equity involving secured borrowing
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Sophia Ramzan, Partner and Head of Conveyancing
Sophia leads the Residential Conveyancing team and is known for her focused, practical approach and for helping clients feel informed and reassured throughout their property transaction.
Her experience includes sales and purchases, shared ownership, transfers of equity, new builds, lease extensions and more complex residential property matters.
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Speak to Our Residential Conveyancing Team
For advice about a private family loan, historic charge or more complicated title issue, contact Sophia Ramzan, Partner and Head of Conveyancing.