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Borrowers
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Loans - The Interest On Which Is Guaran-teed By The British Government
Mortgages
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Mortgages
To invest money upon mortgage is to lend it
to a person who has house or landed property,
and desires to borrow money at a certain speci-
fied rate of interest. The title deeds of the
property are deposited with the lender of the
money, together with a mortgage deed, which
describes, in full detail, the terms which may
have been agreed upon.
The interest is usually made payable half-
yearly, and in the event of its payment not
being kept up, or the lender desiring the return
of his money, the principal sum can be called
up, the lender giving six months' notice of his
intention to do so. If the borrower fails to pay,
a process of law has to be instituted, called a
foreclosure suit, which, if successful, transfers
the absolute ownership of the property into the
hands of the lender, so that he can receive the
rents as his own, or, if he pleases, sell the
property under legal authority. In view of such
a contingency the value of the property should
considerably exceed the amount of the money
advanced, so as not only to cover the principal
sum, but also any arrears of interest, together
with law costs and expenses. The usual pro-
portion of an advance on mortgage is two-thirds
of the ascertained value of the property, but
there might be circumstances which would war-
rant some variation in the proportion.
The mortgage deed should be prepared by the
lender's own solicitor, who would see that the
property had a good title and use all the pre-
cautions necessary in transactions of this kind
to guard against fraud and loss; and in many
cases a professional valuation of the property
would be desirable, as a preliminary, before the
advance is entertained at all.
Cases have been known where fraudulent per-
sons have borrowed money on mortgages of
property conveyed to themselves, but as to which
they were trustees only for others. The lenders
or mortgagees have, in such cases, no alternative
but to give up the deeds and submit to the loss
of their money.
Debentures are a form of mortgage applicable
to the raising of money by a corporation or
joint-stock company.
The company mortgages its property for a
certain sum, too large for a single person to
advance, so it is divided up into even amounts
of, say, £100, the money being secured by de-
benture bonds, bearing interest at a fixed rate,
and being saleable in the stock markets.
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