Many people get a friend or relative to take up a mortgage, but as a rule it is considered better to transact such business with a solicitor.
Most solicitors have clients pre- pared to take up mortgages, and the best course is to visit a known solicitor and state the case ; more than likely he will be able to supply your needs.
The mortgage will not extend to the full value of the property; your own funds must make up the balance. Just how much will be advanced depends on actual circumstances. On freehold property, a higher proportion of the purchase money will be offered than on leasehold; and if the lease has less than thirty years to run, the loan will be comparatively small. Property in good preservation will attract a greater loan than neglected property requiring a good deal spent on it. In the cases of trustee money, the law forbids the granting of mortgages for a higher sum than two thirds of the market price of the property.
A mortgage is usually met by paying the pre-arranged interest periodically, say, half-yearly or yearly, and then by paying the principal in one complete lump when saved. Thus you do not keep on lessening the capital by such amounts as you save—whatever you save is banked until the sum has grown sufficiently to pay off the mortgage. This means that the interest which you have to pay never grows less; but it does not operate as wastefully as it sounds, because what you bank should produce a certain amount of interest, which may be added to the capital, by placing your savings in a deposit account.
The only drawback to borrowing on mortgage is that the lender may require the return of his money on giving six months’ notice. This privilege operates both ways— you may give similar notice of repayment if you wish.
The fact that a mortgage can be terminated by either party on giving six months’ notice may operate to your benefit on occasion. If, for instance, you borrow a thousand pounds, you will have to pay interest on this sum until the debt is fully repaid. But after a year or two you may inherit five hundred pounds, or come by it from business transactions, and feel that it should be used to cancel half the debt. Certainly, to bank the sum would produce interest ; but not so much as you are paying for the loan of a similar sum. Therefore, your best plan is to arrange with the solicitor to pay off the first mortgage of a thousand pounds, and raise a fresh one of five hundred. What you inherit is then used to make up the difference.