When obtaining a mortgage loan, there will be a number of words used that new homeowners may not be familiar with. In order to better understand the legalities of mortgage loans, many people find it helpful to have some of these terms explained...
One term that is commonly used in the mortgage loan industry is the word "conveyance." A Conveyance is the legal document showing the transfer of ownership of land or buildings. The term "Freehold," on the other hand, is used to describe the actual ownership of a piece of property and its land. In order to demonstrate this ownership, a "Land registration" must be completed. The land registration is the legally-binding document that shows the ownership of the specific property and its land. This document is also commonly referred to as the Title.
If a person is to own a property or land for a specific period of time as opposed to in perpetuity, this is known as a "Leasehold." A leasehold may be sold separately from a freehold and is owned by another person. All of this information is recorded on a "Legal Charge," which is a legal document that acts as a record of data of the person or entity that is the owner of the land or property. This is not the same as the "Mortgage deed," which is a document showing that the lending institution has a legal charge over the property. Once the lender no longer has a legal charge over the property, the mortgage deed is no longer valid.
Another word used in the mortgage industry is "disbursements." Disbursements are the fees that central and local government agencies and solicitors receive. These may include the cost of land registry, stamp duty, search fees, and more. Other fees that a property purchaser may have to pay include the "Sealing Fee." This is a fee that is created when the lender releases their legal charge over the property, such as when releasing the mortgage deed.
The term "Seasoned mortgage" is used to describe when a debtor has paid toward his mortgage as agreed up for at least six months. In some cases, a debtor has to have been paying on the mortgage as agreed for a year before it will be referred to as a seasoned mortgage. Whether or not a mortgage is a seasoned mortgage will determine if it is available for being bought and sold in bulk on the secondary market.
"Mortgage by legal charge" is another term used in the mortgage industry to describe the type of mortgage a person has received. With a mortgage by legal charge, the debtor is the legal owner of the property that was purchased with the mortgage loan but the creditor does have some rights over the property. Within these rights is the right to take possession of the property if the agreed upon mortgage repayment schedule is not adhered to by the debtor. Certain procedures must be followed by the creditor in order to legally enforce the right to repossess the property.