The debt instrument of a mortgage is used to allow one to purchase land without paying the

entire purchase price onetime. It is the security the lender uses to lend the money to the
borrower. Mortgages acquires interest in the land which is used as the security. The borrower has
the right to pay the entire amount borrowed and the interest incurred while the lender has
proprietary interest in the land as it is the security for the loan as mentioned.
When the owner who had legal or equitable interests in land prior to 1925 and used the land as
security to raise money, the interest he as the borrower has in that land was conveyed fully to the
lender. With this, the financial institution or mortgagee would promise that the estate would be
re-conveyed providing that the amount raised was repaid together with all costs and interest. This
is also stated in the contract with the repayment date mentioned therein. The repayment date was
also known as the legal date of redemption and the borrower had to ensure that payment was
made in full risking the lost of their estate if it wasn’t fulfilled. Thankfully equity was to the
rescue with equity of redemption and the equitable right to redeem. So once the borrower paid all
the charges due in full even though it was paid within 6 months after the legal date for payment,
re-conveyance of the property to the borrower was an entitlement, Thornborough v Baker. This
known as the equitable right to redeem is one of the valuable protection that can be gained by a
mortgagor.
The equity of redemption is a representation of the rights to the property that the mortgagor has
in the event the property is sold or the mortgage is discharged. It is therefore seen that equity will
come to the protection of the mortgagor and their equitable right to redemption against the
mortgagee, Jones v Morgan. In the case of Samual v Jarrah if the court deems that the transaction
is a mortgage a court will not consider any term of the loan which inhibits the mortgagor from
getting back the property secured upon repayment of what is owed to the mortgagee.
So in protecting the mortgagor and preventing the mortgagee from acquiring the property from
the mortgagor the mortgagor keeps their legal fee simple. Also it will be possible for the
mortgagor to get other legal mortgages of their land helping them raise funds and this is possible
as they still retain the legal fee simple.
A mortgage being a security and not a conveyance cannot be made to be irredeemable, therefore,
the right to redeem can’t just apply to certain people or periods of time, Re Wells. Postponing the
right to redeem is possible and valid only where the mortgage is not harsh and unconscionable as
long as the right to redeem isn’t made illusory, Fairclough v Swan Brewery and Knightsbridge
Estates Trust v Bryne. Seeing that a provision in a mortgage that gives the mortgagee an option
to purchase the property is null and void, the only way the mortgagee can be given an
opportunity to purchase is if in an independent transaction that is separate from the first and not
part of the mortgage itself, Reeve v Lisle. This is so as to protect the mortgagor who is in a
vulnerable position when the loan is being negotiated.
The mortgage as a security that comes to an end when the money is repaid such as he payment of
the principal, interests, and costs allows the mortgagor to redeem the mortgage and have the
mortgagee’s rights extinguished in full. As a result, collateral advantages made to the benefit of
the mortgagee was struck down by the court. So the mortgagor is under no other obligation other
than repaying in full. There is however no obligation to this once its not unfair or unconscionable
and does not restrict redemption, Biggs v Hoddinot. An unconscionable term as defined in
Multiservice Bookbinging v Maden gives the court the ability to strike down such term of the
mortgage or the entire mortgage. Even a high interest rate that might render the equitable right of
redemption with no value the court won’t as in Cityland and Property v Dabrah where the
interest amounted to 57%.
Under s.23 Land Registration Act 2002 a legal mortgage by way of registered estate will be
created by the execution of a legal charge by way of mortgage. This is deemed to be the creation
of a proprietary interest under s.87 Law of Property Act 1925. The Financial Services and
Markets Act 2000 will regulate the market when a first mortgage of residential properties is
created after 31st October 2004 for borrowers who is an individual, protection can be gained
under section 140 A-C of the Consumer Credit Act 2006 which amended the Consumer Credit
Act 1974.
There are various benefits that the mortgagor is protected by with respect to mortgages in equity
of redemption, statute and common law. A mortgage that was obtained by undue influence will
be struck down whether it was directly or through a third party who acted on behalf of the
mortgagee. The law in this area has gone through consistent transformation through Barclays
Bank v O’Brien and Royal Bank of Scotland v Etridge (2002).