As we continue our journey through the 'Crunching Concepts' series, we delve into the world of mortgages. A crucial part of UK land law, mortgages can seem like an intimidating concept at first glance. In today's instalment, we aim to break through that apprehension and make mortgages less mystifying.
What are Mortgages?
Mortgages refer to the type of secured loan used to finance the purchase or development of land or property under UK land law. Essentially, they create a legal charge against the property which safeguards the lender's (called the mortgagee) interest should the borrower (known as the mortgagor) fail to fulfil their repayment commitments.
Why are Mortgages Important?
Mortgages hold immense significance due to several reasons:
1. As a pivotal source of funding, they pave the way towards property ownership and development.
2. They define the rights and obligations of both borrowers and lenders, tremendously influencing their financial standing and their rights relating to the use of the property.
3. Adherence to mortgage terms is essential as non-compliance could potentially lead to the lender seizing the property, selling it or applying other possible remedies.
4. Comprehending the legal implications of mortgages is crucial for effective property transactions, financing, and dispute resolution.
Disentangling Mortgages Through Case Law
Understanding mortgages becomes simpler when we examine an example case:
• Etridge (No.2)  2 AC 773: This landmark case established the guidelines governing a spouse's guarantee of their partner's business borrowing in cases where undue influence or misrepresentation was involved. It underlined that lenders should take judicious steps to ensure that the spouse was aware and had received independent advice concerning the transaction.
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