mortgage

what is a mortgage

a mortgage is a legal charge/agreement in which a borrower (the mortgagor) grants a lender (the mortgage) a security interest in real property to secure repayment of a loan.

the mortgagor retains possession of the property but the moorage has rights over it in case of default of repayments

who is the mortgage

the mortgage is the lender who provides the loan and holds the mortgage as security

eg banks, building societies

who is the mortgagor

the mortgagor is the borrower who grants a mortgage over their property as security for a loan

how does a mortgage work

a mortgage works by allowing the borrower to obtain funds to purchase a property while granting the lender a security interest in the property

the borrower repays the loan in monthly instalments including principal and interest. if the borrower defaults the lender may excerisse legal remedies such as foreclosure or sale

when can the mortgagor start repaying

the mortgagor typically starts repaying the mortgage immediately after the loan is disbursed, according to the agreed upon repayment schedule.

the terms of repayment,including interest rates and duration are specified in the mortgage contract

what is the equity of redemption

the equity of redemption is the mortgagors right to reclaim full ownership of the property upon repayment of the mortgage debt . this right exists from the moment the mortgage is create and conntues until foreclosure or sale

what are the clogs or fetters on the equity of redemption

clogs or fetters on the equity of redemption are contractual provisions that unduly restrict or prevent the mortgagor from redeeming the mortgage

courts generally consider such provisions invalid if they are oppressive or infringe upon the mortgagors rights to redeem

what are collateral advantages

collateral advantages are additional benefits that a mortgagee may obtain beyond the repayment of the principal and interest such as a share of the mortgagors business profits

these advantages must not be oppressive or unfairly extend the mortgage beyond its intended purpose and are only found valid in commercial property use.

when does the mortgagors right to redeem arise

the mortgagors legal right to redeem arises as soon as the mortgage is created (soon as the ink is dry) but is usually set as 6 months as per contract.

however in practical terms the equitable right is usually excessed upon full repayment of mortgage debt which date is stipulated in the contract (usually around 25 years)

what is the mortgagees statutory power of sale and right to possession

1. the power of sale allows morgagees to sell the property without court intervention if the mortgagor defaults.

2. the right to possession enables the mortgage to take possession of the property often to protect their security interest or recover outstanding debt

these rights are subject to statutory requirements and equitable principles

what are duties of a selling mortgage

a selling mortgage has a duty to act in good faith and take reasonable steps to obtain the best possible price for the property. this includes proper marketing, obtaining valuations and avoiding conflicts of interest. failure to comply with these duties may result in liability to the mortgage for any financial loss incurred