Before you make a secured loan against property, take the time to understand the real value of the security, should you need to enforce it.
Things to consider include
- the value of the property;
- the equity the borrower has in the property;
- the terms of any prior ranking charge or mortgage; and
- who is in occupation.
There are several types of security that you can take when providing a secured loan against property:
- registered fixed charge ;
- unregistered fixed charge;
- registered mortgage;
- notice against dealing.
An alternative to a loan secured against property is a loan secured against other assets. This can be a particularly useful commercial finance product for businesses that don’t own property. A fixed and floating charge is registered at Companies House. This way, people looking into the Company or LLP know that the specific asset is charged and may not be freely dealt with by the company.
Other types of property (not real estate) may also be used to secure financing. This is usually referred to as asset finance and may include aviation finance, equipment finance and hire purchase. Additionally, provision of finance against the book debts of a business, especially if provided alongside a loan in respect of plant and machinery or stock, is referred to as asset based lending, or ABL.
In either case, you will want to ensure the security is adequate, to know that it can be enforced if required, when and how it can be enforced and what its effect will be.
Whether you are providing commercial finance or borrowing, security will usually be required. The commercial finance team at Francis Wilks & Jones have the expertise to ensure your interests are looked after. Contact us today to discuss your security needs.