Has anyone ever explained to you in plain English what your Priority Sum is in your mortgage?
Well let me take this opportunity to explain:
The Priority Sum is a figure that your Bank or Lender nominates so that may be able to borrow more money in the future without having to come back to see your Conveyancing Practitioner.
It also gives notice to any third party i.e. another mortgagee or Lender that if you borrow up to the Priority Sum and there’s a mortgagee sale then the third party may or may not receive whatever is left over. it is to discourage you to borrow more money form anyone esle. Your Bank or Lender does not want you to borrow money from anyone else.
In fact; The Priority Sum is the figure that your Bank or Lender nominates to advise any interested party and subsequent Mortgagess the amount of priority the Benk or Lender will hold over subsequent mortgages. This amount may include an additional amount over and above what you have borrowed to cover interest and charges that the Bank or Lender may require to be paid.
The fact that the document does not specify the amount that you have borrowed may allow you to borrow more monies in the future without having to discharge the old mortgage and complete a new mortgage.
If you decide to obtain a subsequent mortgage or caveat over the land you would first need to obtain the consent of the first Mortgagee. If you do not obtain the consent and the property is sold by mortgagee sale, depending on the amount of the priority sum and amount borrowed from your first mortgagee, there may be insufficient to repay the mortgage or caveat. The priority sum stated in the first mortgage gives notice to the subsequent mortgagee or caveator of whether there would be sufficient funds to repay all debts owed on the property.
We hope this explanation assists you and if you have any Conveyancing and Settlement questions contact the Professionals on 0800 2 87878

Have a great day Kim kim@propertyconveyancingservices.com