Published: 23/01/2008

A little known clause in many mortgage contracts means that additional borrowing such as loans or overdrafts taken out through the same lender could also be secured against your property.

Many mortgage lenders include an 'All Monies Charge' in their mortgage contracts which means that it's not only your mortgage which is secured against your home. Should you have additional borrowings with the same lender by way of personal loans and overdrafts then you could find that these are also secured on your property. This means that your home is at risk should you default on the additional borrowings as well as your mortgage.

The All Monies Charge is used by many high street lenders to secure all borrowings, present or future, against your home. So, whilst you may think you are taking out an unsecured loan with them you could find they have your home as security should you default.

So, what should you do?

First, if you are in the process of taking out a new mortgage ask your solicitor to check whether your lender uses an 'All Monies Charge'. If they do then you can ask your lender to remove that clause or alternatively seek another lender who does not.

If this is impractical or you already have your mortgage in place then it's sensible to arrange any additional borrowings with a lender other than your mortgage lender. In fact, it usually makes sense to shop around for additional borrowings anyway as you can usually find a better deal than your mortgage lender is offering.

In the event that it's too late and you already have additional 'unsecured' borrowings with your existing mortgage lender then you need to find out of this clause is in play. If you ask your lender they should be able to tell you, alternatively the solicitor you used when you purchased the property should be able to find out. If the All Monies Charge is in place then you need to be aware that your home could be at risk if you default on additional borrowings and not just your mortgage. Alternatively rearrange your additional borrowings with another lender so that the debt is truly unsecured (make sure you check for early repayment penalties if you are paying off a loan).