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Posts Tagged ‘law’
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Every person is in dire need of money at some point of time in his life. At this juncture, even the wealthiest of men might not have enough money in hand. This is the point where mortgage comes into the picture. Mortgage is a term that actually refers to the transfer of interest or charge of a property or possession to another person as a security for the debt that they have to repay. So the person who lends the money is called the money lender and the person who borrows it is the borrower.
Mortgages are classified based on the legal aspects that each mortgage specifies. It can be either a legal mortgage or an equitable mortgage. A legal mortgage is made under the law jurisdictions of a particular country. This is classified into two more subdivisions namely the mortgage by demise and the mortgage by legal charge.
The mortgage by demise is being used for a very long time. It was the original form of mortgage in the early years and it is still being used. In this type of mortgage, in case the borrower is unable to repay the debt or the loan, the lender automatically becomes the owner of the mortgaged property. If the loan is redeemed, the lender should return the property back to its rightful owner. This type of mortgage is being used in several states in US.
The second type of mortgage which is known as the mortgage by legal charge, the borrower remains the legal owner but the lender gains sufficient rights over the property. These rights will enable the lender to enforce their security and gives them the right to take over the possession or sell it to another person. This is the most commonly used type in many countries like Scotland, Pakistan and many more. These mortgages are often recorded in a register as a proof for the lender.
An equitable mortgage is a mortgage that doesn’t come under any legal jurisdictions. The money was lent and the security was promised is the way in which this mortgage works. But this has not been accepted in several countries because it doesn’t follow the laws of the country. In this mortgage the lender takes the legal documents of the property and the borrower signs a memorandum as an assurance. Thus the mortgages come in handy when a person is in need of money.
Tags: law, lend, money, mortgage, term
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