Home Prices

Mortgage 101

Home PricesBefore settling on a particular type of mortgage, it is important that you do your due diligence by getting to know the different types of mortgage and their individual advantages. Your lender will typically evaluate your particular needs and financial situation and advise you on what type of mortage is best suited for you.

What is a mortgage?

A mortgage is simply the conveyance or transfer of an interest in a particular fixed property with the intent of using the property as a security for the repayment of a loan. That being said, there are six types of mortgages as will be briefly discussed here.

1. Simple Mortgage

This type of mortgage involves the express or implied binding of the mortgagor/mortgager to the repayment of a loan. This means that the mortgagor has transferred the right of sale of his property to the mortgagee in the event of failing to repay. Although the mortgagee has the right to sell the property, he cannot until after getting a court decree permitting him to do so.

2. Mortgage by Conditional Sale

This type of mortgage refers to a situation where the mortgagor apparently sells the property based on certain conditions. The conditions for sale of the mortgaged property are:

 That on such a payment being made, then the sale cannot be valid, or

 That on default of the payment on the agreed date, the sale becomes absolute, or

 That on such payment being made the person who buys the property shall transfer the property to the seller.

3. English Mortgage

There are three major features of this type of mortgage, which are:

 The mortgagor makes a personal promise to repay the loan on a specific date.

 There is an absolute transference of the mortgaged property to the mortgagee. This also gives the mortgagee the right to sell the property without a court decree.

 The mortgaged property can only be re-transferred when the mortgagor has completely repaid the money on the agreed date.

4. Mortgage based on usufruct

Also called usufructuary mortgage, this type of mortgage is based on usufruct, which is a legal right that allows a person to receive profits from a property owned by someone else. Usufructuary mortgage compels the mortgager to deliver the property as well as giving the mortgage the following rights:

 The right to hold on to the property until repayment is done.

 The right to get part, or the total rent profit from the property.

 The right to receive the rent profits in the place of the interest or the loan or the both.

 The right to incur any liabilities during the course of ownership

5. Mortgage by deposit of title deeds

Sometimes referred to as “equitable mortgage,” this type of mortgage is common with banks as it does not require any registration. It simply involves the transfer of property title deeds by the mortgagor to the mortgagee as a form of security for a loan.

6. Anomalous mortgage

This refers to any mortgage which does not conform to the definition of any of the other types of mortgage. Example of anomalous mortgage is the kind which results from the combination of two or more types of the other mortgage types.

If you are looking to buy a home, I can recommended an experienced trusted lender who will work diligently to help you find a mortgage that meets your needs.

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