A charge gives a lender control over a property or asset as security for a loan.
- First charge: The lender with the first charge has the primary right to recover their loan (including capital and interest) if the developer defaults. They are first in line to be repaid from the proceeds of selling the property.
- Second charge: The lender with the second charge can only recover funds once the first charge lender has been fully repaid. While second charge lenders have the legal right to repossess a property, this right only takes effect after the first charge has been fully satisfied.
Once all charges on the property (first, second, or further) have been repaid, any remaining funds go to the developer. For all of our second charge loans, CrowdProperty acts as the senior lender.