Financing, Mortgages, and Settlement
Mortgage mechanics
Bermuda mortgage lending is dominated by local banks, with loans secured by a legal charge or mortgage over the property. Candidates must understand loan-to-value ratios, amortisation, fixed versus variable rates, the mortgage deed's remedies (power of sale, possession, foreclosure) and the borrower's equity of redemption. Settlement requires coordination of funds, discharge of any existing charge, registration of the new security, and payment of stamp duty. Escrow and stakeholder arrangements protect both sides at completion.
Traps to watch
Questions frequently test the priority of mortgages: a registered first charge ranks ahead of later charges, and registration timing matters. Watch for the borrower who takes a second mortgage without the first lender's consent, and for the lender's right to demand insurance and to require the borrower to maintain the property. Another trap is the treatment of a deposit paid to the seller's agent when the deal collapses - is it refundable, and who holds it? Also check whether a mortgage requires the lender's consent to a subsequent sale or lease.
Rule of thumb
At settlement, never release keys or the deed until funds are confirmed and the discharge of the existing mortgage is in hand.
Worked example
A buyer's lender requires a 20 percent deposit and a first legal charge. The seller has an existing mortgage. Completion requires the seller's lender to provide a discharge and the buyer's funds to be applied simultaneously, with both charges registered in the correct order.