How our mortgage system came about! Mortgages today are part of our everyday language. We hear all about them in the news and as we see eye catching adverts from the banks and Building Societies as we wander down our local High Street. We certainly have embraced them in the UK as pretty much the only way most of us could ever afford to b buyb a home. But have you ever wondered how, and when, mortgages came about?
The First Mortgage System
You would probably be surprised to learn that, as far back as 1190, the concept of a mortgage was documented. English common law at that time included a law that protected a creditor by giving him an interest in his debtorb s property. With this law, the creditor held the title to the property, but the debtor could sell the property to recover money in the event the debt was not paid
However, as old as the concept of mortgages is, the basics have never changed b the high value of real estate puts it beyond the reach of most people. So the only way to buy property is to borrow money.
A b Dead Pledgeb
The word mortgage is a French word and originates from blending two Latin words. b Morib is the Latin word for death and the old French word for death is mort. b Gageb is a Latin word meaning to pledge to forfeit something you value if you cannot repay a debt. The translation of the word mortgage is a b dead pledgeb b nice!
According to the English Jurist, Sir Edward Coke (1552 – 1664), the actual meaning of the term mortgage, or b Dead Pledgeb is as follows, b It seemeth that the cause why it is called mortgage is, for that it is doubtful whether the Feoffor will pay at the day limited such summe or not, & if he doth not pay, then the Land which is put in pledge upon condition for the payment of the money, is taken from him for ever, and so dead to him upon condition, &c. And if he doth pay the money, then the pledge is dead as to the Tenant, &cb
Put in simpler terms, if you cannot repay your mortgage, you will forfeit your property. This means your property is now b deadb to you. Alternatively, once you have repaid your mortgage in full, the mortgage ceases to exist and the b pledgeb is now b deadb .
Fancy olde English maybe, but the principal is exactly the same as today!
Nowadays, millions of us have a mortgage. They are fairly easy to obtain and most mortgages can be adapted to suit any changes in your financial situation. Taking out a mortgage is the best way of paying for a new property. The b dead pledge,b continues to adapt to the modern business world and it is likely you will always have the opportunity to purchase property by taking out a mortgage.