The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Mortgages
  • What is a mortgage?
  • Difference between a mortgage and a charge
  • Mortgages can be legal or equitable
  • Legal mortgage
  • Equitable mortgage
  • What types of assets can be mortgaged?
  • Assignments under s 136 of the Law of Property Act 1925 (LPA 1925)

Lenders will often take security as support for a borrower's obligations under a loan. Taking security means that they will have certain rights over the secured assets in the event that the borrower fails to repay the loan.

A mortgage is one of the four types of security recognised under English law; for more information on these, see Practice Note: Types of security.

This Practice Note explains:

  1. what a mortgage is

  2. the difference between a mortgage and a charge

  3. the differences between a legal mortgage and an equitable mortgage

  4. the types of assets that can be secured by way of mortgage, and

  5. how assignments by way of security fit in with mortgages

For information on how mortgages are created, see How is a mortgage created?.

For ease of reference, in this Practice Note:

  1. the 'mortgagor' refers to the party providing the mortgage (which may in practice be the borrower or a third party security provider)

  2. the 'mortgagee' refers to the party to which the mortgage is granted (which, in practice, is likely to be the lender or a security agent), and

  3. the 'secured obligations' refers to the obligations expressed to be secured by the mortgage (eg the obligations of a borrower to a lender under a loan agreement)

What is a mortgage?

A mortgage is the transfer of the ownership of an asset as security for a debt

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