Most people in civilised societies understand that a mortgage is a loan, normally secured on a property but not always. Many think they are a fairly recent innovation but in fact mortgages in England can be traced back to the 12h century.
The law in those days stated the mortgage was a conditional sale, that the borrower held title to the property but the lender could sell the property if the debt wasn’t paid and so recover his money. Nothing much has changed, with so many properties being repossessed in 2008/2009.
An interesting bit of trivia is that ownership rights extended upwards into the sky but how you could benefit from owning what is ostensibly fresh air is open to debate.
As pioneers discovered more countries, mortgages became fairly widespread and readily obtainable, and lending became more refined. However, many mortgage terms only ran for 5 years and most lenders requested a 50% deposit. Translate that to today and virtually everyone would be renting their property.
What tended to happen if the borrower could not repay the mortgage at the end of 5 years was the loan was re-financed, which is very much like today when many of the younger borrowers extend the term for one reason or another.
During the Great Depression in America, when lenders had no money to lend and borrowers had no money to pay, the whole system collapsed with thousands of foreclosures (what we term repossessions). Various laws came into force in the USA during the 1930s when it became easier to buy and Fanny Mae was introduced in 1938 to keep the pool of money available to borrowers.
Under the new legislation the securities and banking industries became more strictly supervised. What happened in 2008 then!
Moving on into the 1960s when double income families really started to take off and interest rates were reasonably affordable, property ownership started to increase.
Of course, owning a property really came to the fore in the 1980s when the government introduce Right to Buy for council tenants. Assuming you had lived in a council property a certain number of years tenants could buy their home with up to 60% discount off the value of the property.
In many cases the mortgage payment was equal to or less than the rent they had to pay, so it was a win win situation for tenants who otherwise may have struggled to own their own homes.
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The FCA does not regulate some forms of Buy to Let Mortgages.
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