Charge

Credit slang for ‘taking a legal mortgage’ or ‘taking a mortgage’. Also another word for ‘mortgage’.

A First Charge is usually a First Mortgage over a property, and a Second Charge is a subsequent mortgage, ranking after the First Mortgage.

Any asset can be charged, not just property. Boats, cars, almost anything both fixed and otherwise is chargeable.

A charge may not always be a legal mortgage. An Equitable mortgage is one where no formal documentation may be in place, but the ‘charge’ is effected simply by possession of the asset. The holder of that asset is said to have a ‘lien’ or ‘equitable lien’ over the asset.

Holders of legal mortgages or charges have a power of sale if payments are not made.

Holders of equitable mortgages or charges do not have a power of sale, and if they wish to enforce their security, they need first to apply to the Courts for an Order for Sale.

See also Charging Order and Charge over Equitable Interest

Not to be confused with Total Charge for Credit which is a defined term in a credit agreement regulated by the Consumer Credit Act 1974

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