UK MORTGAGE LOAN INFORMATION

A mortgage loan is usually arranged to facilitate the purchase of property however the cash released can often be used for other purposes including home improvements, pension provision, buying cars, paying for holidays or weddings etc. Provided that the lender is aware of the proposed purpose of the borrowing there is usually no problem in making satisfactory arrangements provided that the property offered as security will cover the amount borrowed and that the borrower has the financial means or income to be able to discharge the re-payment instalments.

A mortgage loan is only available to the owners of property, domestic or commercial, who have sufficient equity in that property to cover the value of the loan. This means that monies received in the event of a forced sale of the property, after paying off any other prior loans secured on that property, must be sufficient to cover the further borrowing. In this way the lender is never seriously at risk and can recover the amount of the loan, if instalments are not properly paid, by making application to a court of law for an order for sale of the property which may then progress without the consent of the owner.

The interest rate that is charged on a mortgage loan reflects not only a sum to give a fair profit to the lender but also relates to the perceived risk undertaken by the lender in making a loan available to a particular individual. Those with a clear financial record will usually be quoted very favourable rates that are substantially cheaper than unsecured bank borrowing. For those with a bad credit history, county court judgements or defaults the interest rate may be slightly higher however as the lender is almost always covered by the value of the property any increase on the basic rate is minimal and in almost all cases will be considered as reasonable. We are also able to assist those who have been bankrupt, who are the subject of an individual voluntary arrangement (IVA) or who are self employed with minimal business records.

The way in which a mortgage works and thereby offers security to a lender depends on several statutes and on the existence of the Land Registry. The Land Registry which is government run facility contains details of all property in the UK and a record of all recent transactions. A lender will firstly check with the Land Registry to ensure that the borrower actually owns the land that is offered as security and in order for the loan to be capable of enforcement through a forced sale of the property must register the debt with the Land Registry which ensures that it takes priority over the owners unsecured borrowing and over any later secured borrowing. Failure to register the debt properly means that the lender must, if necessary, pursue his loan as an ordinary creditor which does not give priority over other lenders relating to any sums raised upon sale of the property.