10.1.1 Mortgages - Creation and Rights of Both Parties


Welcome to the tenth topic in this module guide - Mortgages. When an individual wishes to pay for the purchase of a property, it is very unlikely they will have sufficient free assets to buy the property outright. Therefore, they will seek a loan to finance this up-front purchase. In return for the loan, the lender will take ‘security’ over the property. In other words, if the borrower of the money does not pay their loan back, the lender can take the property and sell it in order to get the money they lent back plus interest. This is called a mortgage and there are a variety of different types to understand.

At the end of this section, you should be comfortable understanding the difference between legal and equitable mortgages, as well as the respective rights of the parties involved.

This section begins by outlining what a mortgage actually is, before considering the different types considering the relevant time periods. The rights of the mortgagor and mortgagee are then discussed before turning to the remedies each party may seek. Finally, the mortgagee’s liabilities are outlined as well as the formalities for ending a mortgage.

Goals for this Section

  • To understand what a mortgage is
  • To understand the relative rights and remedies both parties have

Objectives for this Section

  • To be able to differentiate between an equitable and legal mortgage
  • To understand the different types of mortgage that may occur
  • To understand the different applications of the relevant legislation
  • To understand registration and its effect on mortgages

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