Why is this mentioned in your mortgage deed in this manner?
If you fall into arrears concerning your mortgage repayments over a long period of time, your debt will increase. The lender will incur extra costs to get you to pay the mortgage repayments you owe, such as the costs of a penalty charge, interest or even enlisting a bailiff.
Naturally, the lender does not wish to incur these additional costs themselves, and would in such cases be looking to recover the costs through the proceeds of a foreclosure sale of the property, in priority to any other creditors. This priority is defined within the mortgage deed, and can never exceed the amount stipulated in the deed. In our example, this would be
Usually, however, this is a scenario that lenders will avoid, as they would sooner opt for intervention and foreclosure (forced sale) on such properties.
5. Loan details
Loan details mean the terms and conditions of the loan: for example the duration, the interest rate, the fixed-rate interest period and the annuity amount of the loan segments. In some cases, however, these conditions are not defined within the mortgage deed. This is lender-dependent. Many lenders tend to refer to the ‘general terms and conditions’ or the ‘binding offer’.
If this is referred to in the deed, then you will not have to seek out the specific loan details in the deed. In such instances, the lender has opted to have you sign the offer (containing all conditions) again at the solicitor’s office. This offer, signed by you, is then attached to the mortgage deed, and is kept in a safe at the notary’s office, together with the deed documents.
If the loan details are listed in the deed, then you can check whether they correspond to the interest rate offer and/or the binding offer you signed via your mortgage advisor.
6. Completion statement
Last, but not least is the completion statement. This is an overview of all the costs that are charged through the solicitor, or settled with the seller. The most important thing on the completion statement is the amount on the bottom line. This is the amount you need to transfer to the solicitor’s third-party bank account (before completion), or the amount you will receive if you are selling a house (two working days after completion of the deed(s)).
It is essential that there is evidence that this amount is in the account of the solicitor at the time of transfer. If it is not, then the solicitor cannot and may not execute the deed. So be sure to transfer any outstanding amounts on time!
Your own capital
During the advisory process, your advisor prepared a financing plan, which states approximately how much of your own capital needs to be brought into the solicitor. Be advised that this is an estimate. Your advisor is not able to know the exact amount in advance, as this depends, for example, on whether or not you have enlisted an estate agent, on the solicitor you have selected, and on any settlements on the completion statement between you and the seller of the house (for example, the annual owner overheads and any service charges that may be payable to the residents’ association).
You can check the completion statement to find out if the mortgage amount is correct, and if the amount to be paid (or received) is broadly in line with what was stated in the financing plan. Have you chosen to transfer the deposit amount to the solicitor yourself? If so, this already forms part of your own capital that you will be contributing.