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Hi Melanie,

In a previous post I mentioned that we had equity in our house (with our mortgage provider) but a real negative equity because of a First Plus secured loan. I talked about borrowing more from the mortgage provider in the hope that F+ realising they had little, if any, equity would perhaps negotiate a lower figure.

I think you mentioned that F+ were unlikely to agree to the increase in our mortgage through our mortgage provider because it would simply be eating into their own claim on the equity.

I'm a little worried because last year we did extend our mortgage to consolidate further. We borrowed £30k to pay off a loan and a credit card. Our mortgage provider was aware of the F+ loan. We told them and it isn't something you can hide anyway! We received no correspondence from F+ so either they didn't know about it or weren't bothered.

My concern is that it was our duty to have informed F+ of the extension to the mortgage and by not doing so we may get into trouble.

Who should have informed F+?

The solicitors acting for the further advance ought to have notified First Plus and got their permission to the advance. The security of a second charge holder cannot be affected by the dilution of security from the first charge holder. Perhaps this all did happen and the further advance is marshalled underneath First Plus.

Best to get the solicitor who acted for you to confirm the position.

MelanieGiles wrote:

The solicitors acting for the further advance ought to have notified First Plus and got their permission to the advance. The security of a second charge holder cannot be affected by the dilution of security from the first charge holder. Perhaps this all did happen and the further advance is marshalled underneath First Plus.

Best to get the solicitor who acted for you to confirm the position.

Thanks Melanie. It is all confusing! We didn't involve solicitors for the £30k. We simply did it over the 'phone. It was during the application that the guy said our house had a value of £210 on their system.

On our mortgage statement it refers to the £30k as a Mortgage Sub-account.

If I understood correctly then, that the mortgage provider will get the call on house for the main mortgage, First Plus will then try and get something if there was anything left and then the mortgage provider would get any remainder for the mortgage extension.

If I could turn the clock back with F+!

Based on what you say I think the position is as you now understand it, unless there were discussions between the 2 lenders resulting in a deed of priority, which you might never be told about. Seems unlikely though.

Ian

ianmillington wrote:

Based on what you say I think the position is as you now understand it, unless there were discussions between the 2 lenders resulting in a deed of priority, which you might never be told about. Seems unlikely though.

Ian

Yes, it was agreed instantaneous so unlikely that discussions took place. A strange one form the mortgage provider though. We were very surprised that we could do it and assumed they only did it as they would get first call on any equity.

This means if we do go BR then F+ will have about £40k of equity in the house.

That would seem to be appropriate - but a quick on-line check at H M Land Registry costing £2 would be able to clarify the order of priorities if you were at all concerned.

MelanieGiles wrote:

That would seem to be appropriate - but a quick on-line check at H M Land Registry costing £2 would be able to clarify the order of priorities if you were at all concerned.

Not concerned now that I've spoken to one of the advisers on the 0800 number at the top! It's probably totally irrelevant! I will put a separate post up.