A charge is a legal interest in property that secures a debt. In other words, a charge is a way of saying that the property is being used to guarantee payment of the debt.
There are two main types of charges in securitisation:
- Legal charge: A legal charge is a formal document that is registered against the property. This means that the charge is recorded on the public record, and it is visible to anyone who searches the property title.
- equitable charge: An equitable charge is not a formal document, but it is still a valid form of security. An equitable charge is created when the borrower agrees to give the lender a security interest in the property.
Charges are an important part of securitisation. They help to protect investors by ensuring that the property can be seized if the borrower defaults on the debt.