'Wrap Around Mortgages'- What Are They?

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'Wrap Around Mortgages'- What Are They?

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By : Dorothy Plunkett 19 or more times read

Submitted 2012-02-09 04:12:55

What is a Wrap Around Mortgage?

A wrap around mortgage is a term generally given to a form of mortgage where the Seller of the property provides the finance for the Buyer to buy the property. The Seller acquires the financing in the form of a mortgage funding ('the Primary Mortgage') and sells the property to the Buyer permitting them to pay in instalments (usually every month) ('the Secondary Mortgage') at a rate and term determined by them. The installments are usually more than the Seller is repaying on the Primary Mortgage making it possible for the Seller to make a profit. In the event that Buyer default on those installment payments, the seller then has the right of to repossess the property.
Wrap Around Mortgages have already been commonly available in the U.S.A for a while and with the growing scarcity of mortgage loans in the UK have grown to be increasingly more common.

Pitfalls of Getting a Wrap Around Mortgage loan

Wrap Around Mortgages are not governed by the FSA
As the Wrap Around Mortgage is not a mortgage in the legitimate legal sense ( it is not secured directly on the property and does not show up on the title deeds, it's a contactual agreement between the seller and the buyer whereby the buyer is providing a 'promissory note') the occupier ('buyer') of the property does not have the protection of the courts against foreclosure
The title to the Property will remain in the name of the seller (the Wrap Around Mortgage provider)- it has to, because the Primary Mortgage is secured against the property in their name . This means that there is nothing to prevent the seller from selling the property at any time without recourse to the occupier. Additionally, in the event the Wrap Around Mortgage provider defaults on the Primary Mortgage, the property will be repossessed over the head of the occupier who will then have lost any investment they may have made in the Property by way amongst other things, the payment of their regular instalments on the Secondary Mortgage to the Wrap Around Mortgage provider.
It could be said that all the Buyer has is a glorified Assured Shorthold Tenancy ( they are paying a monthly sum for exclusive possession, over a term ('Street v Mountford' (1985) ) which could conceivably mean that the Seller may use the provisions under the 1988 Housing Act to gain possesson after the buyer falls behind on three months payments or on simply giving the buyer two months notice.

Author Resource:- At iconvey, we are specialists in conveyancing and Property Law We ensure that you are always aware of the costs at the outset with a transparent fee structure and no hidden fees. To discuss your needs or to obtain a quote for your conveyancing visit our website: http://www.iconvey.co.uk

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<!DOCTYPE HTML PUBLIC '-//W3C//DTD HTML 4.01 Transitional//EN' 'http://www.w3.org/TR/html4/loose.dtd'>; <html><head><title>Article2008.com | 'Wrap Around Mortgages'- What Are They? </title></head><body><h3>'Wrap Around Mortgages'- What Are They? </h3> By: Dorothy Plunkett What is a Wrap Around Mortgage? A wrap around mortgage is a term generally given to a form of mortgage where the Seller of the property provides the finance for the Buyer to buy the property. The Seller acquires the financing in the form of a mortgage funding ('the Primary Mortgage') and sells the property to the Buyer permitting them to pay in instalments (usually every month) ('the Secondary Mortgage') at a rate and term determined by them. The installments are usually more than the Seller is repaying on the Primary Mortgage making it possible for the Seller to make a profit. In the event that Buyer default on those installment payments, the seller then has the right of to repossess the property. Wrap Around Mortgages have already been commonly available in the U.S.A for a while and with the growing scarcity of mortgage loans in the UK have grown to be increasingly more common. Pitfalls of Getting a Wrap Around Mortgage loan Wrap Around Mortgages are not governed by the FSA As the Wrap Around Mortgage is not a mortgage in the legitimate legal sense ( it is not secured directly on the property and does not show up on the title deeds, it's a contactual agreement between the seller and the buyer whereby the buyer is providing a 'promissory note') the occupier ('buyer') of the property does not have the protection of the courts against foreclosure The title to the Property will remain in the name of the seller (the Wrap Around Mortgage provider)- it has to, because the Primary Mortgage is secured against the property in their name . This means that there is nothing to prevent the seller from selling the property at any time without recourse to the occupier. Additionally, in the event the Wrap Around Mortgage provider defaults on the Primary Mortgage, the property will be repossessed over the head of the occupier who will then have lost any investment they may have made in the Property by way amongst other things, the payment of their regular instalments on the Secondary Mortgage to the Wrap Around Mortgage provider. It could be said that all the Buyer has is a glorified Assured Shorthold Tenancy ( they are paying a monthly sum for exclusive possession, over a term ('Street v Mountford' (1985) ) which could conceivably mean that the Seller may use the provisions under the 1988 Housing Act to gain possesson after the buyer falls behind on three months payments or on simply giving the buyer two months notice. Author Resource:-> At iconvey, we are specialists in conveyancing and Property Law We ensure that you are always aware of the costs at the outset with a transparent fee structure and no hidden fees. To discuss your needs or to obtain a quote for your conveyancing visit our website: <a href="http://www.iconvey.co.uk/quote/get_quote/index.php">http://www.iconvey.co.uk</a> Article From <a href='http://article2008.com/'>Article2008.com</a> </body></html>

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