Can I Obtain a Secured Loan if I Have a Charging Order on My Home?

Yes, you can – although it may not be easy.

When a lender or creditor takes a legal interest in your home, it is called a ‘charge’. Your mortgage will ordinarily be your ‘first charge’ – i.e. the mortgage lender has first call on any money owed to them when the property is sold.

If you have a County Count Judgment against you ordering you to repay a debt, you are obliged to make repayments towards that debt. If you don’t, a creditor may be able to apply to the court for a ‘charging order’ to enforce the CCJ. A charging order gives the creditor security for the debt. This means that the judgment debt would become ‘secured’ on your home. The lender will also take a ‘second charge’ over your property. When your home is eventually sold, the creditor can recoup any money owed to them, once your ‘first charge’ lender has been paid what they are owed.

If you then decided to take a secured homeowner loan on your property, the lender would effectively be taking a ‘third charge’ over your property. That means they would only be able to reclaim any money owed to them once both your mortgage lender and the ‘charging order’ creditor had been repaid.

To take out a secured homeowner loan in this case you would need to have a decent amount of equity in your property. The secured loan lender would also have to agree to lend as a third charge behind the other charges on your property, depending on the circumstances.

Whilst it may not be easy – many lenders will only lend if they can take a ‘second charge’ over your home – there are specialist lenders who will consider a secured homeowner loan, even if you are unfortunate enough to have a charging order secured on your property.

To use your home to raise money at a competitive APR, please fill this homeowner loan form.