Jump to content
House Price Crash Forum
classixuk

Some Stupid Questions About Mortgages

Recommended Posts

I know these are stupid questions but I am genuinely interested!

1. Can you get a mortgage loan to buy something other than a house?

Let's say for instance that person A buys a property for £200K on an interest only mortgage. The bank hold a charge over the property until the mortgage is redeemed.

Could person B buy a £200K 25 year bond at 7% interest on a similar interest only mortgage and on the same terms (i.e. bank puts charge on bond until mortgage is redeemed)?

2. Is there any difference in an interest only loan of 5 years and an interest only mortgage of 5 years apart from the name?

3. Following that thought, if a couple bought one property 50/50, and to fund their respective parts of the purchase Sally used an interest only mortgage and Peter used an interest only loan, could Sally claim to own more of the house than Peter because she paid the mortgage if they ever fell out?

I know this one seems daft but it seems to be accepted that whoever pays the mortgage (and thus has their name on the deeds) owns the house.

Hmmnnnn... :unsure:

Share this post


Link to post
Share on other sites

I know these are stupid questions but I am genuinely interested!

1. Can you get a mortgage loan to buy something other than a house?

Let's say for instance that person A buys a property for £200K on an interest only mortgage. The bank hold a charge over the property until the mortgage is redeemed.

Could person B buy a £200K 25 year bond at 7% interest on a similar interest only mortgage and on the same terms (i.e. bank puts charge on bond until mortgage is redeemed)?

2. Is there any difference in an interest only loan of 5 years and an interest only mortgage of 5 years apart from the name?

3. Following that thought, if a couple bought one property 50/50, and to fund their respective parts of the purchase Sally used an interest only mortgage and Peter used an interest only loan, could Sally claim to own more of the house than Peter because she paid the mortgage if they ever fell out?

I know this one seems daft but it seems to be accepted that whoever pays the mortgage (and thus has their name on the deeds) owns the house.

Hmmnnnn... :unsure:

1. Not in general, but property other than real estate can be mortgaged -- ships, for example.

2. Yes. A mortgage is secured against property and a loan isn't.

3. Paying the mortgage doesn't get your name on the deeds; putting your name on the deeds gets your name on the deeds.

Share this post


Link to post
Share on other sites

1. Not in general, but property other than real estate can be mortgaged -- ships, for example.

2. Yes. A mortgage is secured against property and a loan isn't.

3. Paying the mortgage doesn't get your name on the deeds; putting your name on the deeds gets your name on the deeds.

Thanks Zorn.

Further to your answer to question 2, what about substantial loans that are secured on your property? Why aren't these called mortgages if that is the only difference?

Share this post


Link to post
Share on other sites

All loans are now effectively secured as lenders have been able to pursue defaulters on "unsecured" loans for repayment, this has included reposession or forced house sales where necessary.

People might think they are taking out an unsecured loan, but if they do not pay that loan back then the courts have power to hand over/seize any assets that could be sold in order to repay the loan.... Bailiffs can come and claim other assets, but the courts can still rule that your house can be an asset to repay an unsecured loan.

So IMHO an unsecured loan is only not secured against your house if you do not own a house. Effectively all finance is secured against your house if you are a homeowner.

Share this post


Link to post
Share on other sites

3. Following that thought, if a couple bought one property 50/50, and to fund their respective parts of the purchase Sally used an interest only mortgage and Peter used an interest only loan, could Sally claim to own more of the house than Peter because she paid the mortgage if they ever fell out? [/u]

------------

cant remember all this. I asked my flatmate who is a law student about it a while ago but am not sure now and probably didn't understand it all anyways but...

I doubt it. Can you have joint ownership? The case when one person is the legal owner and the other is just a partner is below. Different rules probably would apply if they were married.

The purchaser is the legal owner of the house. Anyone who pays the mortgage (unless specifically agreed between the legal owner and the payer that this is a loan or gift etc) has an automatic equitable interest in the property. The legal owner holds their share in trust. I assume that if the legal owner sells then the payer of the mortgage can sue them for breach of trust or some such thing. Even though it is automatic the payer should register their interest with the land registry. If a subsequent buyer of the property fails to do a LR search then the new buyer can be sued for the equitable interest the person has. Theres lots of different rules related to when the property was purchased etc ect as new legislation has been recently written in this area.

As for unsecured loans vs secured loans... practically speaking isn't it a lot easier to negotiate payment terms with unsecured debt as they may prefer to get some back rather than none? If you get a CCJ then the lender can then apply for a charging order. This means you cant sell the home without giving them your equity. It is very rare for the courts to force a sale.

Tim G.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.