Law Trust and Equity
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- Date Submitted: 04/04/2015 03:05 PM
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Mortgages
Introduction:
N.B. The lender is the mortgagee, the borrower is the mortgagor
Definition: A mortgage is an interest in property granted by a mortgagor to a mortgagee as security for the payment of a debt or the discharge of some other obligation (Santley v White 1899)
It gives the mortgagee a proprietary right that it can shape to its own use depending on its particular requirements.
Traditionally, a mortgage of land was created by the transfer (conveyance) of the mortgagor’s estate in the land to the mortgagee, subject to the provision that it be conveyed back to the mortgagor’s estate in the land on payment of the debt.
Types of Mortgage:
Two main types:
Repayment: The mortgagor borrows a capital sum and agrees to pay back that sum plus interest over a fixed period of time, in instalments.
At the end of the period, the registered charge is discharged and the mortgagor owns the property absolutely
Endowment: The mortgagor borrows a capital sum for a fixed period. This accumulates interest and the mortgagor repays that interest in regular instalments. No part of the instalments goes towards repaying the capital sum.
However, the mortgagor also enters into an “endowment policy” (savings plan). This policy is calculated to yield a sum equivalent to the capital sum owing under the mortgage.
What is the difference between a mortgage and a charge?
In theory – a charge never involved the transfer of the property to the charge, therefore the rights a charge confers on a charge, though proprietary, are not as extensive as those by a mortgage on a mortgagee. (In practice – difference is minimal and unimportant)
Creation of Legal Mortgages
Before 1926
Freehold/The Fee simple Estate
A legal mortgage was created by conveying the fee simple estate to the mortgagee subject to a covenant requiring the mortgagee to reconvey it on redemption. (Payment of the debt)
Leasehold/Term of Years Estate
A legal mortgage was create by assigning the...
Introduction:
N.B. The lender is the mortgagee, the borrower is the mortgagor
Definition: A mortgage is an interest in property granted by a mortgagor to a mortgagee as security for the payment of a debt or the discharge of some other obligation (Santley v White 1899)
It gives the mortgagee a proprietary right that it can shape to its own use depending on its particular requirements.
Traditionally, a mortgage of land was created by the transfer (conveyance) of the mortgagor’s estate in the land to the mortgagee, subject to the provision that it be conveyed back to the mortgagor’s estate in the land on payment of the debt.
Types of Mortgage:
Two main types:
Repayment: The mortgagor borrows a capital sum and agrees to pay back that sum plus interest over a fixed period of time, in instalments.
At the end of the period, the registered charge is discharged and the mortgagor owns the property absolutely
Endowment: The mortgagor borrows a capital sum for a fixed period. This accumulates interest and the mortgagor repays that interest in regular instalments. No part of the instalments goes towards repaying the capital sum.
However, the mortgagor also enters into an “endowment policy” (savings plan). This policy is calculated to yield a sum equivalent to the capital sum owing under the mortgage.
What is the difference between a mortgage and a charge?
In theory – a charge never involved the transfer of the property to the charge, therefore the rights a charge confers on a charge, though proprietary, are not as extensive as those by a mortgage on a mortgagee. (In practice – difference is minimal and unimportant)
Creation of Legal Mortgages
Before 1926
Freehold/The Fee simple Estate
A legal mortgage was created by conveying the fee simple estate to the mortgagee subject to a covenant requiring the mortgagee to reconvey it on redemption. (Payment of the debt)
Leasehold/Term of Years Estate
A legal mortgage was create by assigning the...