This section is from the book "Real Property, An Introductory Explanation Of The Law Relating To Land", by Alfred F Topham. Also available from Amazon: The New Law Of Property.
The mortgagor is usually allowed to remain in possession; but he has no right to possession, if the mortgagee chooses to enter.
The mortgagor has a power to redeem his land (kk) at any time on payment of the principal debt and interest; but he must give the mortgagee six months' notice of his intention to redeem, or six months' interest in lieu of notice.
(i) 37 & 38 Vict. c. 57, s. 7, amending 3 & 4 Will. IV. c. 27, s. 28.
(k) S. 8.
(kk) This is called his "equity of redemption."
This is to give the mortgagee an opportunity of finding another investment for his money.
The right of the mortgagor to recover his land free from all charges and obligations at any time on payment of the debt and interest can never be destroyed except by (1) foreclosure (see p. 227 above), or by (2) lapse of time (see p. 230).
The maxim is "once a mortgage, always a mortgage::
This maxim is applied in two ways -
(1) Equity will not allow any "clog" on the equity of redemption.
This means that any provision in the mortgage deed which attempts to deprive the mortgagor of his right to redeem absolutely and at any time (ll) is void.
Thus, a provision that the mortgagee shall not be allowed to redeem after 6 years would be void. So also -
Howard v. Harris (1681), 1 Vern. 33.
Howard mortgaged land. The mortgage deed contained a proviso that the mortgagor and his heirs male might redeem. Howard conveyed the land, subject to the mortgage, to an assignee, who was not his heir.
Held, the assignee may redeem.
And a mortgagor who redeems is entitled to get his land back free from all restrictions.
Carritt v. Bradley,  A. C. 253.
B, who held most of the shares in a tea company, mortgaged them to C. The mortgage contained a proviso that B would induce the company to employ C as its agent to sell tea, and would pay damages if he was not so employed. The company paid off the mortgage, and ceased to employ C.
(ll) I.e. at any time after the mortgage money has become payable.
Held, the proviso in the mortgage restricting the rights of B and the company ceases to exist after the mortgage is paid off.
This rule does not prevent the mortgagee from buying, and thus putting an end to, the equity of redemption; for the mortgagor can, by a subsequent independent transaction, agree to give up his right to redeem (l).
The law considers that the mortgagor only needs protection when he is borrowing and perhaps pressed for money: when he has once got the money, he can make what bargain he pleases, provided it is really independent and is not part of the loan transaction.
(2) If a transaction is really a mortgage, though it is carried out in the form of a sale, equity will treat it as a mortgage, and will not allow the mortgagor to be deprived of his equity of redemption.
Thus, A sells his land to B for £1000, and A reserves an option to buy back the land within a year for £1050. This may be practically a mortgage of the land for £1000 at 5 per cent., with an attempt to deprive A of his land if he does not exercise the option by paying the money within the year.
If so, the Court will treat it as a mortgage, and allow A to redeem his land, even after the year, on payment of the mortgage debt with interest at 5 per cent.
Marquess of Northampton v. Pollock,  45 Ch. D. 190.
C was entitled to certain property if he should survive W.
C insured his life for £34,500, to be paid if he died before W. He then mortgaged his contingent interest in the property and the policy of life insurance to the insurance society for £10,000. The mortgage contained a proviso that if the £34,500 should become payable, it should belong to the society absolutely.
Held, this proviso was void.
(l) Lisle v. Reeve (1902), A. C. 461.
Statute of Limitations, - If the mortgagor remains in possession of the land for 12 years without paying any part of the principal or interest, the right of the mortgagee is barred. See p. 230, ante.
Power to Lease Mortgaged Land. - Whichever of the parties to a mortgage is in possession of the land has power to make leases.
By the Conveyancing Act, 1881, s. 18. - If the mortgage was made after the Act, either a mortgagor or a mortgagee, if in possession of the land can, make valid leases for the following periods.
(1) Agricultural or occupation leases 21 years.
(2) Building leases 99 years.
Note, that these are the same terms as are allowed to a tenant for life under the Settled Land Act, except that a mortgagor or mortgagee cannot make mining leases.
If the mortgage was made before 1881 neither the mortgagee nor the mortgagor has any power of leasing except by express agreement.