Mortgages

What is a Mortgage

A mortgage is a charge on a property which secures a loan by the Mortgage Lender (the Mortgagee).  If it is a legal mortgage (as opposed to an equitable mortgage) it has to be in writing and signed by the Mortgagor (the owner of the property who is usually the borrower).  A mortgage is an interest in property.  Anybody who buys the property will not get a clear title until that interest is removed or discharged. 

The Mortgage document will also contain Terms and Conditions relating to interest charged on the capital and the mode for paying off the Mortgage.  It will also incorporate a power by the Lender (the Mortgagee) to obtain possession of the property and sell it.  It will also contain restrictions on the way the Borrower uses the property.

The Terms and Conditions relating to a Mortgage can and do vary considerably according to the rate of interest, the way in which the Mortgage is to be repaid and any collateral security.   

Usual important Terms and Conditions of the Mortgage

It hardly needs to be said that the most important condition of all is that the borrower should keep the mortgage payments up to date.  There are also some very important non-monetary conditions.  These are:-

(a) (Unless the mortgage specifically allows it) you should not let the property without the consent of the Lender
(b) You can not make any structural alteration to the property without the consent  of the Lender

 A Breach of any of these terms could lead to the Lender taking Possession action.

Different types of Mortgage and Mortgage Schemes

There are now many different types of scheme and product and they are constantly changing.  For more information on this subject, we would suggest visiting a website maintained by an independent FSA.  The following are recommended:-

Money Made Clear (maintained by the FSA) 
Your mortgage and re-mortgage