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Home » Mortgage Overview » Mortgage by Legal Charge

Mortgage by Legal Charge

The term mortgage is a process of utilizing the debtorís property, as a form of security deposit for the purpose of payment of a debt. There are two types of legal mortgages namely mortgage by demise and mortgage by legal charge. Mortgage by legal charge, is a process whereby the debtor remains the legitimate owner of the property. However the creditors also gains sufficient rights over the property to allow them to enforce their security, like a right to take possession of the property or even sell it. The mortgage by legal charge is generally recorded at The Land Registry.

Mortgage debt being one of the major debts owed by the debtor, various banks and other mortgage companies run title searches of the real property.
This is done to ensure there are no mortgages previously registered on the debtor's property which may have higher priority. The Mortgage by legal charge is very common in the United States and since the year 1925, this type of mortgage has been the standard form in England, Wales and Scotland. Also in some Asian countries like Pakistan mortgage by legal charge is the standard method used by Banks to secure the financing.

Mortgage by legal charge is also referred to as the Registered Mortgage. Subsequent to the registration of legal charge, the bank's Lien is recorded in the land register. In the land register it is stated that the property is under mortgage and cannot be sold without getting a No Objection Certificate (NOC) from the Bank. There is another type of mortgage called the Equitable Mortgage whereby the lender is secured by taking custody of the original title documents of the property. Getting a mortgage overview is helpful in understanding the process of mortgage transactions.

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Mortgage Overview