Mortgagor Default Matters:

A mortgage is a document which records security for a loan, which was obtained for the purposes of acquiring title to land. The mortgage document itself usually appears in the second schedule of the certificate of title after being registered with the Land and Property Information (formerly known as the Land Titles Office). This means that in the event that there is a default by the mortgagor (or the borrower) under the mortgage, typically a failure to make a regular scheduled payment, the mortgagee has the right to sell the property to recover the moneys owed to it.

Before a sale can be commenced and completed, a Court order will have to be made to declare that the mortgagee in possession can sell the property in the first place. Such proceedings can be contested by the mortgagor, who will have to establish that no default occurred or that the circumstances do not permit, or should not allow, the mortgagee to sell the land. For more information, see our section on the “mortgagee in possession proceedings.”

It is not unusual for mortgage documents to contain a clause to the effect that if there is default, and if the sale of the property does not generate sufficient funds to pay the mortgagor’s debts, the mortgagor will become personally liable for any outstanding amount. One certificate of title may contain many mortgages, but ordinarily the first mortgagee will have to consent to any further mortgage on the property.

There are several different types of mortgages. The following are three broad categories into which the most common mortgages can fall into:

• Principle and Interest Mortgage, known colloquially as the “P & I Mortgage”. This is the most common form of housing loan for individuals. Payments are made on regular scheduled dates to pay interest and reduce the debt. Interest can be varied and the repayment rate is initially very slow. The term of such a mortgage is often approximately twenty five years;
• Fixed Interest Mortgage is where the interest is fixed at a certain rate irrespective of financial market conditions. It is also possible for a fixed interest mortgage to be arranged in such a way that only the interest is being paid for a particular period and the principle starts getting paid off after that period; and
• Reversed Mortgage is often an arrangement that retirees enter into. This mortgage is one where no repayments are made at all until either the death of the owner or the sale of the property.

If you are a party to a dispute or legal problem involving a mortgage, or if you are a Mortgagor on the receiving end of a letter of demand or Court action from the Mortgagee alleging that you have defaulted under the Mortgage, there might be a number of pertinent legal issues that need to be contemplated, before you can clearly understand how to approach the matter properly. Our mortgage lawyers have been assisting mortgagees and mortgagors for over a decade and we have the skills and expertise necessary to assist with your matter.

If you would wish to discuss your mortgage problem in more detail, you can contact our firm to book a meeting with our mortgage solicitors by telephone on (02) 9233 4048 or send an email to info@navado.com.

This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.