Mortgage loans. What are they?
Mortgage loans are a dual agreement containing a loan agreement, joined to
the mortgage, which is a pledge of property, usually real estate, as security
for the mortgage loan.
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A home mortgage loan always uses real property as the security. In Australia,
where the Torrens Title system operates, [it originated in Adelaide, South
Australia in the 1860's] the borrower retains ownership of the property, and the
mortgage is released or terminated once the loan has been repaid in full. This
is essentially different the "Old Titles systems" that operated elsewhere where
the lender obtained the title till the debt was debt.
Mortgage Loan Purpose
In Australia, mortgage loans are either personal or business loans depending
upon what the majority of the loan is used for. This is important to know, as
with a personal mortgage loan, [where the home loan majority is used to fund the
home as a dwelling place for the borrower, the mortgage loan agreement falls
under the United Consumer Credit Code, and as such affords the borrower a great
deal of consumer protection, and the lender a code of conduct to be followed.
This includes the Mortgage Broker.
Where the majority of the mortgage loan is used for business purposes, such as
an equity loan to fund a business, or to buy an investment property, the
mortgage loan could fall outside the protection of the U.C.C.C., 1996 as
amended.
Whilst a completed mortgage loan application does not bind either party, [it
only allows the lender to verify all the facts before drawing up and issuing the
loan agreement documents] you should discuss this point with your mortgage
broker and take the mortgage loan agreement to your conveyance solicitor, and
discuss the ramifications of this before proceeding with the signing the loan
agreement and mortgage.