Firstly, we have to define what a mortgage is. A mortgage is simply a transaction whereby property, either land or personal property is given as a security for the repayment for the money borrowed

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Security: Land, Stocks and Shares

The UK is well known within the EU of having a high percentage of homeowners. With this, financial institutions have to cater for a widespread of people in order to provide mortgages. As this will involve large amounts of money, lenders have to access the risk and take the necessary precautions. These precautions tend to be taken in the form of a security. The two main forms of security that are generally taken are land, stocks and shares. Land being the most common within the UK.

Firstly, we have to define what a mortgage is. A mortgage is simply a transaction whereby property, either land or personal property is given as a security for the repayment for the money borrowed. Normally the security used is real property, but it can also be personal property, such as a valuable piece of jewellery. This effectively gives the mortgagee the rights to the property, which can be claimed if the mortgagor defaults in repayment. The lender can force the sale of the property and recover the sum borrowed from the proceeds.

With the creation of a legal mortgage before 1925 the mortgage of freehold land was created by conveying the fee simple estate to the lender.  The mortgagee then became owner of the mortgaged property. Whereas, post 1925 there were two ways to create a mortgage, primarily the demise for a term of years absolute; this involved creating a long lease, usually for 3,000 years, over the land which would cease as soon as the loan was repaid. The lender would not have the legal estate conveyed to him and the borrower was expressly given the right to remain in the property.  The borrower had the right to take further mortgages over the property which meant that there could be several mortgages over one house. The borrower might find it increasing difficult to persuade anyone to lend him money, on the basis that the rights of a second mortgagee would be secondary to those of a first mortgagee. Secondly, by way of a charge by deed expressed to be by way of legal mortgage; this is governed by s87 of the 1925 Act.  Under the form of mortgage there is no conveyance of any estate in the property to the lender.  The lender merely gets a charge over the land giving him rights which attach to the property.  The charge gives the lender rights over the property as if he had an interest in it.  The lender had the right to enforce covenants and he is able to create tenancies.  This became the main way of creating mortgages and the demise was rarely used. The main advantage of using the legal charge is that it is short and expressed in simple terms.

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Finally, with the creation Post-Land Registration Act 2002, under s2391) a: - of the Land Registration Act 2002 the only way a mortgage of registered land can be created is by registered charge.  The law on the creation of mortgages will be substantially affected by the introduction of electronic conveyance. This is because the mortgage will come into legal effect at the same time it is created. The present law allows a gap between creation of the mortgage and it taking effect at law. Under the 2002 Act it will only take effect in law when it is entered on ...

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