Mortgage Agreements: 6 Things To Consider
A mortgage agreement is a contract between a borrower (the ‘mortgagor’) and a lender (the ‘mortgagee’) whereby real property owned by the borrower is used as security for a loan. In Queensland, a registered mortgage operates only as a charge over the property for the debt it secures. If the borrower defaults, the lender can take possession of the property and can sell it to recover the debt.
Application for small business people
Mortgages are used by small business people to raise capital or to enable the purchase of additional property. Lenders are generally more willing to advance large sums of money where a property is used as security for the loan.
Small business people will frequently mortgage their own personal property in order to raise money for their business. This can be a risky option, especially if there is some doubt about the future viability or success of the business. It is very important to be aware that defaulting on mortgage repayments can entitle the lender to take possession of the property and sell it to recover the debt. It is vital that borrowers are clear of their rights and obligations under the mortgage agreement, and the serious consequences that it entails.
The mortgage is registered on the title to the property. In Queensland it is recorded in the freehold land register; paper certificates of title are no longer issued. You can sell a mortgaged property, but a buyer will expect clear title, so the loan is usually repaid out of the sale price at settlement and the lender’s release of the mortgage is then registered, which discharges it.
6 key things to consider
There are several important factors that you should be aware of before entering into a mortgage agreement. These include:
- What are the terms of repayment of the debt?
- What is the applicable interest rate on the debt?
- Is the borrower able to repay the debt early?
- What happens if the borrower defaults on the debt?
- Has the property been used as security for any other loans?
- Does the mortgagor have authority to enter into the agreement? This is particularly relevant if the borrower is a company or partnership.
Want my view on your own situation?
Book an initial consultation: up to two hours with me by phone for a fixed fee of $1,650 (including GST), then a short written note of my advice and next steps. If my conflict check means I can't act, I'll refund your fee in full. To check anything first, email
info@klaw.com.auor call
(07) 3103 3199.
Joe Kafrouni, Accredited Specialist in Business Law, Kafrouni Law
Disclaimer: This article is general information only and is not legal advice. Before acting on it, get advice on your own circumstances. To the extent the law allows, Kafrouni Law accepts no liability for any loss arising from reliance on it. This article is the copyright of Kafrouni Law.
What People Say
Book an initial consultation
An initial consultation is the best way for us to find out whether, and how, I can help. It suits business owners and directors facing a decision that matters. You get my considered view of your situation, not just a first impression.
The fee is a fixed $1,650 (including GST). It covers a phone consultation of up to two hours, plus up to one hour of my time to consider the material you send me beforehand and to prepare my written note afterwards. Here is how it works:
1. When you book, you tell me briefly what the matter is about and who else is involved, so I can carry out a conflict check and confirm I’m free to act. If I can’t act for you, I’ll refund your fee in full.
2. I tell you what information and documents I’d like to see, and I consider them before we speak.
3. We talk it through by phone. I give you my initial advice, the options I see and what I’d do in your shoes.
4. Afterwards, I send you a short written note of my advice and the next steps I recommend.
If I can help further, I’ll explain how. If I can’t, I’ll say so. You are under no obligation to engage me further. If your matter needs more than this, I’ll send you a proposal setting out how I can help and an estimate of my fees. No further work starts until you accept it.
I keep only a limited number of consultation times. If none suits you, or you’d like to check anything before booking, email info@klaw.com.au and I’ll do my best to accommodate you.