James has been advised that if his further advance is successful, a new mortgage deed may not need to be drawn up. This is most likely to be because:

James has been advised that if his further advance is successful, a new mortgage deed may not need to be drawn up. This is most likely to be because:

• A. the current mortgage obliges the lender to make further advances, subject to certain criteria.
• B. the new advance is funded from a separate facility.
• C. the property value has increased sufficiently.
• D. the borrower has a perfect credit history.

Answer: (A)

The key idea is that a mortgage deed can cover additional borrowing if the original deed includes a clause or facility for further advances. If the existing mortgage already authorises additional draws, subject to meeting the lender’s criteria, there’s no need to draw up a brand-new mortgage deed for a further advance—the new funds can be secured under the same security and terms. The other possibilities don’t fit as well: funds from a separate facility would usually come with its own documentation and security, potentially requiring a new or amended deed; merely an increase in property value doesn’t automatically remove the need to formalise the borrowing under the correct security; and having an excellent credit history doesn’t by itself remove legal requirements to document the loan under the mortgage terms.

The key idea is that a mortgage deed can cover additional borrowing if the original deed includes a clause or facility for further advances. If the existing mortgage already authorises additional draws, subject to meeting the lender’s criteria, there’s no need to draw up a brand-new mortgage deed for a further advance—the new funds can be secured under the same security and terms.

The other possibilities don’t fit as well: funds from a separate facility would usually come with its own documentation and security, potentially requiring a new or amended deed; merely an increase in property value doesn’t automatically remove the need to formalise the borrowing under the correct security; and having an excellent credit history doesn’t by itself remove legal requirements to document the loan under the mortgage terms.