Prepare the contents of a letter explaining what is meant by a mortgage and describe two types of mortgage.

• A. It is an agreement to transfer ownership
• B. It provides security for money lent and is registered as a charge
• C. It is a lease of the land for a fixed term
• D. It simply records a loan

Answer: (C)

A mortgage is a security for the money lent, created over the land rather than a transfer of ownership. It gives the lender a charge against the property, usually backed by a formal deed and registered as a charge on the land. If the borrower repays, the charge is discharged and ownership remains with the borrower; if repayment stops, the lender can enforce the security, typically by selling the property to recover the debt.

Two common types to describe are legal and equitable mortgages. In a legal mortgage, the borrower provides the lender with a legal interest in the property—often by transferring legal title or by creating a legal charge—so the lender has a formal, enforceable right to sell if the loan isn’t repaid, with the title reconveyed to the borrower once redemption occurs. In an equitable mortgage, there is no transfer of legal title; the security arises from an agreement or the deposit of deeds, giving the lender an equitable right to be repaid. The borrower remains the legal owner, and enforcement depends on equity, though it can evolve into a legal mortgage if the proper steps are later completed.