What do you think banks worry about the most when they give you money? Well, banks are very careful and cautious, but what they worry about most is that you won't be able to pay back the loan. It's not so much a matter of trust, because if you try to avoid them, they'll hire a debt collector or bring you before a judge. What they really worry about is that you won't be able to pay them back, even if you want to.
From their point of view, it seems to make sense. Every day, they give a lot of money to people they don't know. On average, each mortgage costs over a hundred thousand pounds by itself. That's a lot of money for you to just give away. So, what banks do is make sure they are safe. This means that even if something goes wrong for you, they will probably still get their money back.
A loan that is backed by an asset must be backed by that asset. Anything that is worth money is an asset. The asset could be a car or a famous painting, but most of the time, especially when it comes to mortgages, the bank is interested in your house. So, your house will be put up as collateral for the loan.
In practise, this means that even though the deeds to the house are in your name, the bank can add their name to the deeds, giving them the right to take the house and sell it if you stop making your loan payments. For them to take back the house, they would have to give you fair notice and a chance to make payments. They would also need a court order, but that's what would happen in the end. You would be kicked out, and the bank would sell the house, keeping what they need to pay back their loan and giving you the rest.
So, it's not a good idea to carelessly let loans be secured against your home. If you can't make all of your payments, you might want to take out more loans. Usually, you will have to put your house up as collateral for the loan in order to do this. You might be willing to do this because it's the only way to get the loan, but you should know that if you ever fall behind on the payments, your house could be taken away.
