Q: What is a mortgage?
A: Contrary to popular belief, a “mortgage” is not a loan from a bank to buy a house. Although the term mortgage has become eponymous with these loans, a mortgage is more precisely defined as a charge or encumbrance registered on a property title to secure an interest.
Q: If I have a bank mortgage, does the bank own my property?
A: No. This is a common misconception that stems from the historical way mortgages were created. A mortgage is a charge or debt on the property. While it gives the mortgagee (the person lending the money) certain powers over the property, it does not give the mortgagee ownership of the property.
Q: Can the mortgagee sell my house?
Yes. Mortgagees can exercise something known as the “power of sale” if the mortgagor (the person borrowing the money and usually the owner of the property) fails to comply with their obligations under a mortgage. However, this does not mean that the bank can show up at your front door with a real estate agent and a “for sale” sign just because you fall behind on a repayment. The power of sale can only be exercised in very specific circumstances and through very strict procedures.
Q: Can a mortgage be registered over personal property?
A: Generally not. Mortgages by definition can only be registered over real property. There is however something called the Personal Property Securities Register, which is managed by the Treasury and which permits people to register encumbrances or charges over personal property, even intangible personal property. This functions similarly to a mortgage in some ways, but is quite distinct.
Q: Will the mortgage be removed once I pay it off?
A: No. This is a common question which highlights the importance of distinguishing between the loan, being the money advanced, and the mortgage, which is an interest registered over the property (basically just a two page form submitted at the Land Titles Office). While you may have paid off the loan, unless the bank submits a discharge of mortgage, the mortgage will remain on title even though the loan is repaid.