Mortgages in English law are a method of raising capital through a loan contract. Typically with a bank, the lender/mortgagee gives money to the borrower/mortgagor, who uses their property/land/home as security (essentially a reassurance) that they will repay the debt and any relevant interest. If the mortgagor fails to repay, then the mortgaged property which has been used as security may be subject to various mortgagee remedies allowing them to retrieve the debt. Mortgages are an important part of English land law and property law. These concern, first, the common law, statutory and regulatory rules to protect the mortgagor (i.e. the borrower) at the time of concluding the mortgage agreement. Second, English law defines and restricts the process for taking possession of property in the event of default. Third, it places duties on mortgagees (i.e. lenders, like banks) on the price it achieves when selling property.
Although most of the law relating to mortgages relates to mortgages of land, it is possible to mortgage almost any type of property. Mortgages over personal property are often referred to as 'chattel mortgages',[1] and mortgages over intangible rights are often expressed to operate by way of assignment.[2] Separate statutory regimes also exist in relation to mortgages of ships under the Merchant Shipping Act 1995 and mortgages of aircraft and related parts under the Cape Town Convention.
Technically the term "mortgage" refers to the security interest in the collateral, but in commercial parlance the term is often used inclusively as a reference to the entire secured lending arrangement.
The law of mortgages is notoriously complex. In a 1986 working paper relating to land mortgages, the Law Commission commenced thus:
"The English law of land mortgages is notoriously difficult. It has never been subjected to systematic statutory reform, and over centuries of gradual evolution it has acquired a multi-layered structure that is historically fascinating but inappropriately and sometimes unnecessarily complicated."[3]
Slightly more pithily, Lord Macnaghten once commented in a judgment: "no one, I am sure, by the light of nature ever understood an English mortgage of real estate."[4]
^Fisher, p. 229.
^Fisher, p. 259.
^"Land Mortgages (Law Com WP No 99)" (PDF). HMSO. 1 August 1986. Retrieved 13 February 2020.
^Samuel v Jarrah Timber and Wood Paving Corporation [1904] AC 323 at 326.
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