Mortgage

This means an agreement by which an institution agrees to lend you money, and as security takes a legal charge against your title to the property. Technically you grant a mortgage to the lender – bank, building society or whatever – in exchange for the loan. This means you are a mortgagor and the lenders are a mortgagee. Remember playing Monopoly? The Bank is the mortgagee. In the game, you may borrow half the value of the undeveloped site which is then said to be in mortgage. In reality, 50% can be a small loan but similar principles apply in real life.

In practice, the lenders will have their standard mortgage Deed which will be sent to your legal adviser. He can advise you about this but it is not normally negotiable, consequently he may well be subsequently instructed by the lenders. This is a normal procedure, and will save a little time and cost than if the lender were separately represented. However, if any disagreements arise you should ask your solicitor whether he is in a compromised situation. Basically, the legal adviser will be required to confirm to the lenders that all the information given on the application form is true and that you have fully complied with the terms and conditions attached to the original mortgage offer. We trust that will be the case.

From time to time there is talk of a standard mortgage deed but although this sounds a simple idea it is resisted by most of the lenders who regard the suggestion as being anti-competitive.

Mortgage conditions and terms may vary, but the most common period, certainly for first-time buyers, is 25 years. Incidentally, this does not mean you have to continue paying the mortgage for 25 years. Most people move home from time to time and will then rearrange their mortgage. The average varies but few loans remain unchanged for more than seven or eight years. In any case, over 25 years house-price inflation will result in the outstanding mortgage reducing as a percentage of the market value.

Mortgage repayments are normally made monthly with the first one being due a month after you complete the purchase. This will normally be by Direct Debit from your bank. Please budget carefully and make sure that you always keep up-to-date with your payments. The roof over your head is the most important investment you will ever make, and you want to establish a good name and reputation with your lender so that you can move and obtain a new mortgage in the future without any difficulty. If later you have other debts, please remember the mortgage is by far the most important to keep up to date.