TABLE MORTGAGES

Evening Post, Issue 29, 4 February 1935, Page 13

TABLE MORTGAGES

'the ability to Pay ,

REDUCTION OF DEBTS

'■Much criticism has; in Mr. Coates's pamphlet, been levelled at the existing mortgage, system, and the advantages have. been stressed of long-term table mortgages.'.' The" advocates of this system have apparently overlooked the following points:— (a) The mortgagor who has, in recent years, been unable to pay his interest-in full could not have paid such interest plus a reduction in capital indebtedness; ■'■:■■'. (b) It: has'beeni and will continue to be, impossible to prevent mortgagors borrowing money on second mortgage to meet first mortgage interest and repayments of first; mortgage principal. "A substantial part of the mortgage debt in the-Dominion is already on a table basis,: and it has for. long been possible for the borrower who-wished to raise a mortgage on a table basis to do so. We think, on investigation, it would probably be found that in the majority of.-cases where.long-term table moftgageshavebeen: entered into .tha^ither thej^rpper'ty; has. been sold before, the expiration of "the term, or alterations and improvements have so changed conditions that the property has had to be refinanced before the expiry of the term. There are advantages'and disadvantages to the borrower under every system of borrowing, and. many mortgagors have deliberately, and for sound reasons, adopted the: flat mortgage basis. " "We freely admit that had borrowers in-the.past made more extensive-use .of ,the table mortgage system, many who are today in difficulties ' would have been in.a better position. The ~-' chief fault of the existing; mortgage practice lies not in the system itself, but' in the fact (admitted in the Minister's pamphlet) that by far the majority of borrowers never dreamt in prosperous times of reducing their mortgage indebtedness, but were content simply to spend (and in some cases squander) handsome earnings, and trust to the refinancing' of the" whole ' of their mortgage indebtedness when •it became due. . ...