Collateral security—general
Collateral security—general

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Collateral security—general
  • Given by principal mortgagor
  • Given by third party
  • Transfer of collateral securities

The advantages of taking collateral security from a third party to secure the principal debt are that:

  1. the mortgagee may not need to have recourse to the primary security

  2. in the event of the principal mortgagor's bankruptcy, the collateral security need not go in reduction of proof

Collateral security may be given by:

  1. the principal mortgagor himself, or

  2. a third party

Given by principal mortgagor

Individual borrower

In the case of mortgages over residential property by an individual borrower, the collateral security may be a m