Extract

Karl Deeter

Mortgages

Mortgages describe a type of financial contract between a ‘mortgagee’, which is the party doing the lending, and the ‘mortgagor’, who is the one doing the borrowing. The financial contract is based upon a property transaction where the property becomes security for the loan. During the Celtic Tiger, specifically if you were of legal age and had a pulse, then chances are there was a mortgage product somewhere that would suit you. By ‘suit’, I mean to the extent that a lender somewhere would grant credit to someone in that position. The traditional model of a salary multiple was put to the side, and loans were available on ‘self-certification’, and other dubious metrics that helped a lot of people who had no business borrowing leverage up beyond what they could hope to ever repay.

By definition, a mortgage is a loan that is granted in return for the first lien (or ownership right) on a property in order to complete a purchase. This lien is registered on the deed in the Land Registry. When you borrow money from a bank to buy a home, you buy from the seller and simultaneously sell to a bank in exchange for the money to do the deal. The bank then has the first lien as mentioned, while the buyer has beneficial ownership, which means that they get to live there, rent it out or do as they see fit, as long as they pay...