6. The scale of rates and taxes paid by the owner should be ascertained, in diminution of the return from rent.

7. It should naturally be seen that the tenants in the neighbourhood generally are of a respectable class, and the surrounding houses occupied.

8. A respectable solicitor should always be employed to examine the Title, and prepare the Deed of Mortgage. Home-made contracts invariably lead to trouble and dispute, and not seldom to loss.

9. Assuming the loan to be found desirable, it is important that it should be fixed definitely for a period of five or seven years. It is often proposed that the advance should simply be subject to repayment on six months' notice at any time from either side. The disadvantage of this course is that if the current rate of money should fall (that is, if loans generally can be obtained on easier terms than those contracted in this agreement) the mortgagor will give notice of repayment, raise the advance, by transfer, from another source, and thus deprive the lender of an excellent security and entail upon him the cost and trouble of a substituted investment.

10. The character of the mortgagor, - especially on the question of honesty and straightforwardness, - should be carefully investigated from trustworthy sources before the valuation is arranged. He may and should furnish references, but (without implying any distrust) the replies of references are not infrequently limited and ambiguous, and the lender should invariably institute such independent inquiries respecting the owner and his references as will satisfy him that he is treating with a solvent and honourable man. The element of character as the foundation of credit is, as I have already stated, an indispensable requirement in all monetary transactions.

11. I have found it a salutary practice that the lender (or his agent) should occasionally inspect, say, the exterior of properties upon which he has lent in order to observe that the condition of adequate repair has been maintained. I have known of instances where this wise precaution was omitted, and, although the interest was always punctually discharged, the lender discovered, on the termination of the period of the loan (where it finally happened, that he had to enter into possession), that through want of resources on the part of the mortgagor the buildings had been allowed to fall into so serious a state of disrepair that a heavy loss on sale was sustained. For the certain return of his principal unimpaired, the premises should necessarily be seen to be kept preserved in the same structural and internal condition as that which existed when the advance was completed.

12. The Fire Policies should be for such an amount as the valuer may report to be necessary for the rebuilding of the premises - in the event of total destruction by fire, not a partial loss, - in the original state, and it is well also that one year's rent should be insured, so that interest may be forthcoming (to meet the possibility of the mortgagor being then unable to pay) during the re-erection. The Policy should remain in the lender's possession, duly assigned with notice to the company, and in a Fire Company selected by himself.

13. A wise rule is this: never burden the Borrower with terms and conditions which are not reasonably requisite to render the security safe. For example, do not demand a higher rate than the current rate of interest upon mortgages, although his present necessities may compel him to accept whatever terms may be imposed; and again, do not require him to effect, say, a life policy as collateral security where such a supplement is not absolutely necessary. Remember that every needless burden entailed upon a Borrower renders him less competent to discharge his obligations, and thus reduces the stability of the advance.

14. It is well to avoid loans upon weekly-rented properties. They often form remunerative investments as purchases (from the pecuniary point of view), provided the rent be punctually and invariably applied for personally. I am informed that if the collector be half-an-hour on any occasion behind the time of his regular call, the rent, though ready at the prescribed hour, has vanished through the delay. But,both as subjects of mortgage and purchase, the careful investor will avoid these properties, since the cost of repairs and the incessant supervision are too troublesome to receive compensation in the additional rate of return which they produce.

15. I should have mentioned that both in respect of freehold properties and of those of leasehold tenure (to which I now proceed), and whether for mortgage or purchase, if the intending lender (or investor) find on inspection that waste lands or fields, or old mansions with extensive grounds exist in the close neighbourhood, the fact is frequently suggestive that the advance or investment should be avoided. For these spaces may (and probably will) be covered in time by the erection of small dwellings, and thus reduce the value of the superior property on which he has lent. A similar remark applies with especial force to any contemplated purchase of property.