What is a Mortgage

While majority of us at least, once in our life time, would take a mortgage, many of us do not fully understand the field of mortgages.

In simple words, a mortgage is a loan that is secured with a lien and is commonly registered against a property. The lien that is registered first is called a First Mortgage, and the one that is registered after the First, is called the Second Mortgage and so on. The status of the mortgage First/ Second or Third has nothing to do with the amount of the loan under the mortgage, rather it is entirely dependent upon the order in which the mortgages are registered on the title of the property.

The person / entity who lends the money is called the Mortgagee and the one who borrows the money is referred to as the Mortgagor.

Mortgage is the standard method by which individuals and businesses purchase real estate without having to pay full in cash for their purchase from their own resources. Mortgage in itself is not a debt, rather it is an evidence of the debt.

Mortgage is a legal contractual document between the lender and borrower. The lien against the property provides security to the lender; it stipulates the terms of repayment of the loan. In case of a default, the mortgage gives the lender an interest over the property to secure the payment of money, or the performance of an obligation.

Mortgage by Demise, is a mortgage, wherein the mortgagee (the lender) becomes the owner of the mortgaged property until the loan is repaid or other mortgage obligation fulfilled in full. This kind of mortgage takes the form of a conveyance of the property to the creditor, with a condition that the property will be returned on redemption, which is repayment of the loan in full.

All in all, the borrower has the right to have the mortgage discharged from the title once the debt is paid. If the mortgagor fails to repay the loan according to the conditions set forth, besides going to the court, the mortgagee has certain rights to recover his monies which are spelled out in the mortgage document. The mortgagee can recover monies, by means of a foreclosure, Power of Sale or judicial sale of the subject property.

How a mortgagee can exercise his right varies from province to province and one must consult a lawyer for prevailing laws and full details.