Are you getting a mortgage? Or are you considering becoming a guarantor? We offer a low fixed fee for obtaining legal advice on mortgages, reverse mortgages, becoming a guarantor and re-mortgages.
What is a Mortgage?
A mortgage is a type of interest in property that secures an obligation and is discharged by the performance of that obligation. Essentially, a mortgage is a document that legally allocates security over a property to a lender/mortgagor. The property subject to a mortgage is generally the same property which was subject to the initial loan agreement between the borrower and the lender. Should the borrower default on the loan, the lender reserves the right to sell the property and recover the loan amount owing.
Is there a difference between a mortgage and home loan?
Despite commonly being used interchangeably, home loans and mortgages are distinct concepts. A mortgage is provided over property as security upon the default of a loan. Alternatively, a home loan is the actual money advanced by the bank or lender to enable you to purchase the property. Although they often accompany each other, this is not always the case.
What does it mean to become a guarantor?
A ‘guarantee’ is a contract to answer to the debt of another. A ‘guarantor’ is a third-party who becomes financially liable for the borrower, generally via offering their home or other property as security against any loan default by the borrower. This means that the lender can take possession of, or sell, any of the assets of the guarantor that have been listed as security to repay the debt, for example, their house.
Due to the financial risk associated with becoming a guarantor, you should obtain legal advice. We offer a fixed fee for providing this advice.
What are the risks of entering a mortgage or guarantor agreement?
The financial risks associated with mortgages and guarantor agreements may be significant. Generally, mortgages are taken over a person’s most valuable property, meaning that the financial loss that could be suffered upon default would be detrimental. In addition, the documents are often difficult to understand which means you may not know what you’re signing up to.
Why should legal advice be sought before you lodge a mortgage or become guarantor?
• Financial institutions often require a Certificate of Independent Legal Advice or a Solicitor’s Certificate to confirm that a lawyer has advised you of the potential risks and liabilities involved with mortgaging a property, re-mortgaging, reverse mortgaging or becoming guarantor. This means that a solicitor usually cannot witness your documents before providing you with legal advice as to the effect of the documents.
• Obtaining this certificate allows the bank to make an assumption against misrepresentation, undue influence and unconscionability, thereby confirming from a lawyer that a guarantor is voluntarily entering into an agreement of their own free will.
Our lawyers will seek to advise you of your rights and obligations pursuant to the mortgage and related agreements, and will help you liaise with your lender to make any amendments prior to signing. You will also warn you any potential risks that you should be aware of.
We understand the stress and financial burden that is associated with these types of financial agreements, and at Carter Dickens Lawyers we will ensure that you are made aware of any long- and short-term risks so that you will be better informed to make any decisions on these matters.
Please note that the above is general information and should not be relied upon as legal advice. All situations are different and legal advice must always be tailored to the specific situation.