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Tuesday, January 29, 2008

The definition of a commercial mortgage

A commercial mortgage can be defined as the transfer (or conveyance) of land (or another tangible asset) from a borrower to a lender in order to secure a loan. The land or property in question is intended for business use. Our focus will be on mortgages secured on land.

While the land is transferred to the lender during the term of the loan, there will be a condition that, once the loan has been repaid, the transfer will become void or the property will be transferred back to the borrower.

The mortgage will be created by the signing of a charge form by the borrower. The borrower is known as the 'mortgagor' and the lender as the 'mortgagee'.

The wording of the charge form will vary according to the nature of the asset. In many cases, the lender will also want to take documents that prove ownership of the land - deeds in the case of unregistered land or the land certificate in the case of registered land.

If you have any questions about this article or others like it, please feel free to contact Drew Mitchell at Solution Mortgages on 0845 123 1260.