What Is A Mortgage Deed? Everything You Need To Know.

If you’re thinking about buying a new home and will need to take out a mortgage to cover the cost, then you may have found yourself asking ‘what is a mortgage deed’? A mortgage deed is a legal document that secures a mortgage loan. The mortgage deed will list the buyer and seller as well as the lender, and it will outline the repayment terms of the loan granted. The deed pledges the property as collateral for the loan and gives the lender the right to repossess the property if the borrower defaults on the loan. Mortgage deeds are typically recorded with the local register of deeds office so that they can be easily accessed by potential lenders 

Read on for a more detailed explanation of everything you need to know about mortgage deeds when buying a property. 

Who Needs A Mortgage Deed?

A mortgage deed is a document that outlines the terms of a loan taken out to purchase a property. Mortgage deeds are therefore typically required for buyers who are borrowing money by taking out a mortgage from a lender in order to purchase a property.

The mortgage deed will also list any collateral that has been put up for the loan, such as the property itself. If the buyer defaults on the loan, the lender can foreclose on the property and take possession of it. For this reason, it is important for buyers to carefully consider their ability to repay a loan before taking out a mortgage deed.

What Is The Difference Between A Mortgage Deed And A Mortgage Offer

Jenga house with mortgage written on one piece

There is lots of jargon flying around when buying a property so it’s understandable that you might get the terms mortgage deed and mortgage offer muddled up.

To clarify the difference between the two, a mortgage deed is a legal document that binds a borrower to repay a loan to a lender. On the other hand, a mortgage offer is a document that outlines the terms of a loan offer, including the interest rate, monthly payment, and length of the loan.

A mortgage deed is typically prepared by a lawyer, while a mortgage offer can be created by the lender. Mortgage offers are usually negotiable, while mortgage deeds are not. If you’re considering taking out a mortgage, it’s important to understand the difference between these two documents.

How Do They Work?

When a borrower takes out a mortgage loan, they are agreeing to provide the lender with collateral in the form of their property. The mortgage deed is the document that outlines this agreement, including the terms and conditions of the loan.

In the event that the borrower breaches the mortgage terms, the deed gives the lender the right to claim ownership of the property and sell it to recoup their losses. Mortgage deeds are therefore an important part of any property transaction, as they protect the lender’s interests in case of default. While they may be viewed publically, mortgage deeds are typically only brought to court in the event of a dispute.

Who Needs To Sign?

A mortgage deed (also known as a deed of trust) is a legal document that pledges your property as security for a loan. The deed must be signed and witnessed in order to be enforceable and needs to be signed by both the borrower and the lender in order to be valid.

This means that if you try to sign the deed electronically or without a witness, it will not be legally binding. Mortgage fraud is a serious problem, and the wet signature requirement helps to prevent it. If you are taking out a mortgage, make sure that you sign the deed in the presence of a conveyance solicitor or other suitable person who can act as a witness. This will ensure that the document is legally valid and will help to protect your interests.

Who Can Witness My Signature?

Pen on paper over witness signature line

In order to be considered a valid witness, the person must be over the age of 18 and must not be a party to the transaction. The witness must also be able to physically sign the document and may need to provide proof of identity, such as a driver’s license or passport. In some cases, notarisation by a licensed notary public may also be required.

While any adult can serve as a witness, it is generally advisable to choose someone who is unbiased and who will be available if questions arise about the mortgage transfer. A family member or close friend may not be ideal in this situation, as they may have a vested interest in the property. An impartial third party, such as a neighbor or coworker, is often a better choice.

How Much Do They Cost?

While there is generally no specific fee attributed to actually signing the mortgage deed, you will be responsible for paying any associated recording and posting fees, plus a fee for your solicitor’s time in preparing the document for you. This should be clearly itemised in the conveyancing quotation that you get when you instruct them and usually falls between £100-£250.

Additionally, if you need to have the ID of either yourself or a witness checked or signed by a licenced notary, then this may incur a small additional fee too but this is unlikely to be more than £50. If you don’t live near to your solicitors’ office, you will need to ensure that your documents make it to their office safely and we would always recommend recorded delivery services for this, which will of course incur a small charge too.

Whilst in most cases the fees surrounding mortgage deeds themselves are relatively small and are more than offset by the benefits of having a mortgage.

As you can see, it is important to consider all of the potential costs before taking out a mortgage so that you can budget accordingly, and always have a cushioning fund to mop up any additional unexpected costs.

At What Stage Of Property Purchase Do I Sign?

The mortgage deed is a document that officially transfers the title of the property from the seller to the buyer. It is usually signed after a mortgage offer has been granted by your lender and around the time of completion when the deed is registered with the local land registry office.

The exact stage when you will sign will depend on the order that your conveyancing solicitor works as in some cases you may sign the mortgage deed at the same time as you sign the contract of sale, and in other cases, you may sign the mortgage deed on the day of completion.

If you are unsure about when you need to sign the mortgage deed, you should ask your conveyancer for advice. Generally speaking, it is best to sign the mortgage deed as early as possible so that you can avoid any potential delays or problems further down the line.

What Happens After Signing?

The document contains important information such as the names of the parties involved, the purchase price, and a description of the property. In some cases, the mortgage deed may also contain conditions that must be met before the title can be transferred, such as the completion of repairs or the payment of outstanding debts. Once signed, the mortgage deed becomes a legally binding contract between the buyer and seller.

After you sign the mortgage deed, the property officially becomes your responsibility. You’ll need to start making monthly payments on the loan, as well as any other associated costs like insurance and taxes.

Failure to make payments could result in the loss of your home. In addition, you’ll need to keep up with all of the maintenance and repairs on the property. This can be a lot to handle, but it’s important to remember that you now have a valuable asset that will appreciate in value over time, and with proper care and management, your new home will be a source of pride and enjoyment for years to come.

Recording A Mortgage Deed

Mortgage deeds must be recorded with the local register of deeds office to be enforceable. The deed must include the names of the borrower and lender, as well as a description of the property being pledged as collateral. Recording the mortgage deed serves as public notice of the loan and puts potential lenders on notice that the property is already encumbered by a loan.

How To Store A Mortgage Deed

Once you’ve recorded your mortgage deed with the register of deeds office, it’s important to store the original copy in a safe place. Many borrowers choose to keep the mortgage deed in a fire-proof safe or deposit box.

Alternatively, you may give it to your lawyer or loan officer for safekeeping. Whichever option you choose, make sure you know where the mortgage deed is at all times. If you need to refinance or sell your home, you’ll need to produce the original mortgage deed. So it’s best to keep it in a safe and accessible place.

Does Remortgaging Affect The Deed?

When you refinance a mortgage, you are effectively taking out a new loan to replace the existing one. This can affect the mortgage deed in a few different ways.

First, the new lender will likely require their name to be added to the deed. This is because the deed functions as proof of ownership of the property, and the lender wants to be sure that they are protected in case of default.

Additionally, the terms of the new loan may be different from the original loan, which could affect the monthly payments or the length of the loan, so these will need to be added too.

Finally, if the value of the home has increased since the original loan was taken out, refinancing could result in a lower interest rate and monthly payment. Overall, refinancing can result in updates to the mortgage deed, so don’t be alarmed if you are asked to produce the original during the process.

A Brief Overview Of The Conveyancing Process

There is a lot to take in when buying a property, so it can be useful to know how all of the stages in the process fit together.

  • The conveyancing process is the legal process of transferring ownership of a property from one person to another.
  • The first step is to engage a conveyancer or solicitor who will handle the legal aspects of the transfer.
  • Once you have engaged a professional, they will prepare the necessary paperwork to share relevant information about the property with you from the seller’s documents and local searches. This includes the contract of sale.
  • You should also arrange for a building survey to be carried out at this point to ensure the property isn’t hiding any issues that will become your liability to repair once ownership is transferred.
  • Once you are happy with the condition of the property and the contracts of sale, you should arrange mortgage finance if needed with your lender.
  • The next step once funding is approved is to exchange contracts with the other party, which legally binds both parties to the sale.
  • Finally, the transfer of ownership is completed at a settlement meeting, where you will sign the final paperwork and pay any outstanding fees.
  • At this point, the keys to the property will be handed over and you will officially become the new owner. With a little preparation and understanding, the conveyancing process can be relatively straightforward.

In Summary

A mortgage deed is a document that officially transfers the title of a property from the seller to the buyer. It is usually signed at the time of completion when the deed is registered with the local land registry office. The document contains important information such as the names of the parties involved, the purchase price, and a description of the property. We hope this article has been useful in explaining what a mortgage deed is, what happens after signing it, the costs involved and what happens if you need to refinance your home in the future.

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