mortgage

A mortgage is a security interest in property for the repayment of money or money's worth. The mortgagor is the person who grants the interest in the property. The mortgagee is the person to whom the property has been mortgaged.  Mortgages involve a transfer of property, on terms that the mortgagee must transfer title in the property back to the mortgagor once the total sum of the indebtedness has been repaid.  Mortgages may be taken over virtually any property.

The mortgagor has an inviolable right to have the property conveyed back to it from the mortgagee once the sums advanced have been repaid. This right to have the ownership of the property conveyed back to the mortgagor once the debt is discharged is known as the equity of redemption. The mortgagor is said to 'redeem the property' any time after the loan or debt has been repaid to the mortgagee. The equity of redemption is a beneficial equitable interest in the mortgaged property.

Mortgages are commonly associated with the purchase of houses, whereby a building society or bank is the mortgagee and the purchaser of the house is the mortgagor. Businesses also use mortgages to secure start-up capital for business and otherwise to secure funding. Mortgages are also commonly used to secure advances from lenders on types of property, such as valuable intellectual property rights (such as patents, trade marks, designs and copyright) which come into existence as a result of research, development or ordinary trading or commercial activity.

There are two types of mortgage - legal and equitable.

Several mortgages may exist over one property and in recovery proceedings for mortgage debts, the mortgagors take in priority according to specific rules according to their legal or equitable interest.

Usage: The owner of the intellectual property rights granted a mortgage to the bank to secure capital funding.

Related Words: legal mortgage; equitable mortgage; security interest; equitable mortgage; legal mortgage; real property; personal property; equitable charge; legal charge; lien; charge; fixed charge; floating charge; pledge; asset.