You have probably come across the words “mortgage deed” when obtaining a property loan. To understand what a mortgage deed is we first need to understand the term mortgage. A mortgage loan involves collateral or security you pledge to a financial institution when borrowing money against it. It can also be defined as the transfer of interests in a specific property to secure the loan advanced in the future.
The person who mortgages his property against the loan is called the Mortgagor. The institution or an individual to whom the property is mortgaged is called a Mortgagee.
What is a Mortgage Deed and how does it work?
Mortgage deeds are legal documents that pass over a property’s legal rights to the loan provider. The legal document that enumerates various terms and conditions of the mortgage is contained in the Mortgage Deed.
Mortgage deeds allow the lenders to hold a borrower’s property as a collateral unit until they repay the borrowed amount in full. It allows the lender to hold a homebuyer’s house as a collateral unit until they repay their loan in full. The deed states that if the mortgagor fails to repay the loan on time, they have the legal right to claim the property’s ownership and sell it to recover their financial losses
Mortgage deeds are filed in court and can be viewed at a public registry office. A mortgage deed comes to a close either through the borrower paying off the loan, or if the borrower defaults on the loan. When a borrower pays off the loan, the lender files a document called a “satisfaction of a mortgage” which states that they no longer hold interest in the property.
Types of Mortgage Deeds
There are various types of mortgage deed options. Some of them are
Simple Mortgage or Registered Mortgage: The borrower does not transfer possession of the property to the lender. The mortgagor pledges an immovable asset to obtain a loan. The lender has the right to sell the property to recover the owed amount.
Mortgage by Conditional Sale Deed: The borrower sells the property, but the sale will turn empty if they repay the loan.
Usufructuary Mortgage Deed: The borrower transfers possession of the property to the lender and the lender receives the property’s possession rights. They can earn through rent without any personal liabilities on the borrower.
English Mortgage: It involves the borrower transferring the property to the lender with a legally binding commitment to repay the loan. It establishes the borrower’s personal liability and gives the lender the property’s rights if successful payment leads to recovery.
Mortgage By Deposit of Title Deeds: The borrower uses their property as collateral for a loan without transferring ownership. The borrower submits the property’s title deed to the lender to avail of a mortgage loan against it.
In short, a mortgage deed is a document that contains all details concerning the loan given including the parties involved, details of the property kept as collateral, loan amount, interest rate and more.
When dealing with legal documents such as a mortgage deed, it is recommended to seek advice from professionals. A Mortgage Advisor in Omagh can help you get through the different types of mortgage deeds and make sure you choose the right one.
