While the majority of mortgages seen in practice are first, second or even third mortgages of a whole registered title (or titles), it is becoming increasingly common, particularly with development sites, to see mortgages of part being created.
This occurs in two situations. The first, more common, situation being where a lender takes a charge over only part of a site being developed, so that the charge sits over where the buildings, rather than the service roads, for example, will be laid. The second is where different lenders take charges over different parts of a scheme. In both cases, this is so that the lender’s security and return is secured against a much more ascertainable and manageable part of a larger development.
There are benefits to this on both sides. For a landowner or developer completing a site in phases, it is much easier to secure funding on a phase by phase, planning-procured basis, once the risk associated with that part of the site can be assessed. There are also certain schemes that are more attractive to different lenders, depending on the composition of the scheme and the uses being developed out. For example, it is generally easier to fund one student block than a whole new neighbourhood providing a student block together with community space, leisure, retail and residential with one lender pursuant to one loan.
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