Mortgage Information

What is a mortgage?

A mortgage is a method of using property, real or personal as security for the payment of a debt. The term mortgage, which in French literally means death vow, actually refers to the legal device used in securing the property, but it is also commonly used to refer to the debt secured by the mortgage. Further mortgage information can be found here on our website.

What it means to take out a mortgage?

In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than on property such as ships for instance. In some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals or businesses can purchase residential or commercial real estate without needing to pay the full value immediately.

In many countries it is normal for home purchase to be funded by a mortgage. In countries where the demand for home ownership is highest, strong domestic markets have developed, quite notably in the countries of Spain, the United Kingdom, and the United States of America.

Some Important and Useful Terminology

Creditor The creditor has the legal rights to the debt being secured by the mortgage and often makes a loan to the debtor of the purchase money for the property. Usually, creditors are banks, insurers, or other financial institutions who make loans available for the purpose of real estate purchase.

Debtor The debtor must meet the requirements of the mortgage conditions, and often the loan conditions imposed by the creditor in order to avoid the creditor enacting provisions of the mortgage to recover the debt. Usually the debtors will be the individual home owners, landlords and businesses who are purchasing their property by way of a loan.

Other participants

Legal Jurisdiction Due to the complicated legal exchange or conveyance of the property, one or both of the main participants are likely to require legal representation. The terminology varies with legal jurisdiction, and can be described as lawyer, solicitor and conveyancer.

Certified Advisor or Planner Because of the complex nature of many markets the debtor may approach a mortgage broker or financial adviser to help them source an appropriate creditor typically by finding the most competitive loan. Recently, many consumers (particularly higher income borrowers) are choosing to work with Certified Mortgage Planners, industry experts that work closely with Certified Financial Planners to align the home finance positions of homeowners.

Other terms

Advance This is the money you have borrowed plus all the additional fees.

Bridging Loan This is a temporary loan that enables you to purchase your new property before you are able to sell your old property.

Conveyance This is the legal document that transfers ownership of unregistered land to you.

Disbursements These are all the fees of your solicitors, such as stamp duty, land registry, search fees, etc.

Early Redemption Charge / Pre-Payment Penalty / Redemption Penalty This is the amount of money you have to pay if you pay your mortgage in full before the time finished.

Equity This is the amount of your property in the market minus all loans that it has.

Freehold This means the ownership of a property and the land.

Land Registration This is a legal document that records the ownership of a property and land.

Legal Charge This is a legal document that records the data of the rightful owner of a property or land.

Mortgage Deed This is a legal document that stated that the lender has a legal charge over your property.

Mortgage Payment Protection Insurance This is the insurance that insures your mortgage payment arrives on time in case you are unable to pay your mortgage.

Sealing Fee This is a fee made when the lender releases the legal charge over your property.

Subject To Contract This is an agreement between seller and buyer before the actual contract is made.

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