Chapter 7: Buyer's funding of the purchase Flashcards
What two things should a solicitor consider when they are instructed by a cash buyer?
Source of funds - money should be in bank account in client’s name for at least 3-6 months
Source of wealth - there should be documentary evidence showing how the money was acquired
Who is the mortgagor?
The borrrower.
Who is the mortgagee?
The lender.
What is a repayment mortgage?
Borrower repays capital and interest each month.
What is an interest only mortgage?
Borrower pays interest for the term of the loan and repays capital at the end of the term.
What is an endowment mortgage?
- Mortgage combined with life insurance policy.
- Borrower pays monthly premiums for insurance policy to pay off loan at the end of its term.
What is a pension mortgage?
- Mortgage combined with personal pension policy.
- Borrower pays monthly premiums for insurance policy to pay off loan at the end of its term.
What is a Sharia compliant mortgage?
Alternative mortgage which addresses concerns regarding the payment of interest.
What is a mortgage valuation report?
Obtained by lender to confirm property represents good security for loan and require buyer to provide evidence that they can afford mortgage.
The majority of mortgages will be handled under which handbook?
The UK Finance Mortgage Lender’s Handbook which sets out standardised instructions for lenders
How must a mortgage be created?
A legal mortgage must be created by deed.
What are the two functions of a Certificate of Title?
- Confirms to lender that title is good and marketable.
- Acts as request for release of mortgage funds.
What is ‘perfecting the mortgage’?
Making the application to register title to the property after completion and ensuring that the lender’s charge is registered as the first legal charge in the Charges Register
What can be done before completion to temporarily prevent new charges from being registered (registered land)?
- OS1 or OS2 search.
- 30-working-day period to complete registration of mortgage free from intervening interests
If land is unregistered and the mortgage triggers first registration, how long does a solicitor have to complete the registration of the mortgage free from any intervening interests?
2 months to complete registration of mortgage free of any intervening interests
