Mortgages & Lender Protection

Question 1

What are the main sources of finance for a property purchase?

Answer 1

✅ Cash Purchase
Funded from savings, inheritance, equity release, or investments​
.
✅ Mortgage
Loan secured against the property –lender can repossess if repayments are not met​
.
✅ Government Schemes (e.g., Help to Buy)
Provides equity loans (20% outside London, 40% in London) for first-time buyers​.

Question 2

What are the different types of mortgages?

Answer 2

✅ Interest-Only vs Repayment Mortgage:
Interest-Only: Borrower only pays interest, full loan must be repaid later.
Repayment: Borrower pays both interest and capital, reducing the loan balance over time​.

✅ Fixed-Rate vs Variable-Rate Mortgage
Fixed-Rate: Interest rate stays the same for a set period, providing stability. May be a penalty if you wish to end or change your mortgage during the fixed period.
Variable-Rate: Interest rate fluctuates based on market conditions​.

Question 3

What are a lender’s rights if a borrower defaults?

Answer 3

✅ Right to possession (Four Maids Ltd v Dudley Marshall, 1957).
✅ Right to sell the property under s.101 LPA 1925.
✅ Right to appoint a receiver.