Mortgages

Contributed by Elizabeth Samra, Consumer Law Centre of the ACT and current to May 2018

Section 204 of the NCC defines a mortgage as including (among other things) any interest in, or power over, property securing obligations of a debtor or guarantor. A mortgage is a form of security that gives the credit provider the right to seize the property if the loan is not paid. Credit providers can take a mortgage over real property, vehicles or other goods they finance.

A mortgage is void if it does not describe or identify the mortgaged property (s 44 NCC).

The credit law also prohibits certain types of mortgages, such as: third party mortgages (s 48 NCC); mortgages that are greater than the debtor’s liabilities under the credit contract (s 49 NCC); future-property mortgages (s 45 NCC); mortgages created over employee’s remuneration or employment benefits and mortgages created over ‘essential household property’ (s 50 NCC). Essential household property means household property as prescribed under regulations made pursuant to the Bankruptcy Act 1996.