The majority of property purchases are dependent on mortgage finance.
The lender’s interest in the property will be protected by a detailed mortgage deed and it is important to read this carefully. The mortgage lender is anxious to preserve their security and common restrictions will include:-
- Restricting the borrowers right to undertake any structural alterations without giving consent first
- Not to let the property – or part with possession of even part (for example taking lodgers) without securing permissions
- To keep the property insured
Lenders will sometimes add ‘special’ conditions. These tend to require that recommendations from their building surveyor – perhaps to undertake specified repairs – are implemented.
If the borrower breaks the terms of the mortgage this may entitle the mortgage lender to repossess the property.
If the borrower is taking a high loan to value mortgage the lender may oblige the borrower to pay for a ‘mortgage indemnity insurance’. The borrower will have to pay a one off insurance premium so that if he defaults on the mortgage and the lender suffers a loss, the lender can claim from an insurance company.