I have a mortgage doc from a major lender with something called a ‘priority amount’
which is twice the price of the purchase price, and about 3 times the amount of the borrowed sum!What does this mean? I have done a bit of searching on the net and found heaps of ‘understanding your mortgage’ type sites, but still can’t find an explanation for this term.
Any late nite finance gurus around?Hmm you got me thinking! I did a google and got this from a NZ website;
Section 80A(2) of the Property Law Act 1952 permits a mortgage to specify a maximum amount up to which advances made under the mortgage shall rank in priority to any subsequent mortgage. This amount is commonly called the “priority amount” or “priority sum”. By contrast, the “amount secured” by the mortgage is the amount owing at any particular time, the repayment of which is secured by the registered mortgage. This amount may or may not be the same as the priority amount at any particular time.
The phrases “amount secured” and “priority amount” are used distinctly from one another in the legislation and are clearly not synonymous.
Does this help you? I have had a few glasses of red … but it sounds like it just means the max amount you can borrow in future? Possibly within the loan term?
Never heard of it before now though [blink]
Liz
Mortgage Lender
1300 780 826As I understand it, should you default on the loan repayment and the house be sold during ‘recovery action’ by a lender, the first mortgagee lender may make a claim on you personally for any shortfall between the sale price of the property and the amount outstanding, up to the priority amount.[blink]
The reason it is higher than the mortgage amount is that it includes all future interest payments.
Of course, I’m probably wrong again!Cheers, F.[cowboy2]
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