A mortgage deed – also known as a legal charge – is a legally binding agreement between you and your mortgage lender. It confirms that you agree to the conditions of your mortgage, including how and when it will be repaid.
You will sign a mortgage deed if you are:
Your mortgage is the loan given to you by a lender (usually a bank or building society) to buy your new home.
The mortgage deed is the legal document that goes with it.
It’s usually about 1 or 2 pages in length and has its own unique reference number, which identifies you as the borrower.
You sign a mortgage deed to agree to the conditions in the mortgage offer, which include:
Your mortgage deed is important because it’s legally binding.
Even though they inspect your financials in great detail before offering you a mortgage, your lender still needs to know that if things go belly up, they’re not left with nothing. A mortgage deed is a promise to them they can count on you to repay the loan according to the plan you’ve agreed on.
So what happens if life takes a turn and you can’t repay your mortgage as you intended to?
The mortgage deed gives your lender what is called a lien on your home – a legal right to your property if you can’t repay the debt according to the terms you agreed on. If you’re unable to pay, your lender can sell the home to repay the debt.
Mortgage offers and mortgage deeds are two different steps in the same process.
First, you’ll get a mortgage offer (or offer of advance), to say that the lender has approved your mortgage application. This means they’ve got all the information they need about your finances and the property you have your eye on, and they’re ready to take things to the next level.
The mortgage offer will include your personal details, the property information, and the conditions of the loan they will offer you. There’s usually a time limit on how long you can take to accept the offer they’ve made.
Your conveyancer will review your mortgage offer and prepare a report for you which summarises the important bits. When they send you the report, they’ll also send you the mortgage deed to sign.
Signing your mortgage deed is how you legally confirm that you agree to the terms of your mortgage offer. It’s only once this is signed that the mortgage is legally in place. You return the signed mortgage deed to your conveyancer.
The mortgage deed is valid as long as you have that mortgage. If you remortgage with a different lender later on, you sign a new mortgage deed for that lender, and your conveyancer will replace the old one at the Land Registry.
If anyone else’s name is on the mortgage – a partner or a parent, for instance – they’ll have to sign too.
Your conveyancer will post you the deed. You’ll review it, sign it in front of a witness, and then send it back to them.
Signing the deed means you’re happy to proceed with the terms of your mortgage offer.
Your witness has to be:
Your conveyancer can be your witness. So can a neighbour or colleague.
Signing the mortgage deed means you’re now obliged to make the payments as set out in your mortgage offer for the time you’ve agreed to.
It also means that you're very close to owning a new home.
Now it’s time to get to work on sealing the deal. This process is called “completion” and involves:
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