What does Charge mean?

The legislation determines that the lender is always entitled to receive the necessary amount in order to cover for the debt, in case your home is repossessed or if you default on your payments. The mortgage charge basically means that the lender has also every right to constrain the borrower to put his/her property towards sale so that he can recover his loss.

This is usually called a “first charge”, while the second charge comes into force when you have made yet another loan having put your home as collateral.

In case of a second charge, it is stipulated that the second lender is entitled to receive his amount owed only after the first lender has been paid out. Basically with a ‘second charge’, the lender becomes only second in line for eligibility of repayment after your property has been sold.