Mortgage and Debt

Marriages and mortgages have something in common – they are both “death pledges”. In a non-secular marriage ceremony, each partner vows to stay with the other ‘until death do us part’. Home buyers who execute a mortgage also commit to a “death pledge”, but not in a literal sense. To explain this, we need to take a brief diversion for a quick history lesson.

Most of the English language has its roots in other languages, with many words derived from Germanic languages. Much of the English vocabulary has also been acquired from Latin, in many cases by way of French.* A good example of this etymology is the word mortgage.

Mortgage is made up from two words – ‘mort’ and ‘gage’. Mort (meaning death) comes from the Latin word mortuus from which we get mortuary and mortal. Gage (meaning pledge) comes from the old French and means a ‘hold or grip’ over something of value to ensure the payment of a debt.

So, a mortgage is a death pledge and this can be viewed from two perspectives. If the borrower repays the loan, the property becomes “dead” to the lender and the mortgage document is annulled. Conversely, if the borrower defaults, the property is forfeited and becomes “dead” to the borrower.

Fast forward to present time and couples want their mortgage “dead” (discharged) to improve the financial equity in their relationship. Research shows that couples fight about money twice as much as they fight about sex. In fact, money is typically cited as the number one cause of marriage break ups.

While love may bind us together, money can wrench us apart. Most families have some level of debt and this is often the root cause of much of the stress and arguments in households. Tough economic times like what we are we are experiencing in 2023 further strain wallets and relationships.

It’s said that opposites attract, but when a spender marries a saver, financial feuds are inevitable. The saver can be seen as a tightwad while the spender is viewed as a squanderer. “Her” shopping sprees and “his” sports toys can create battle lines.

But financial harmony is possible in a union that is for richer, for poorer. Openly talking about money is a good start. A couple will never truly live happily ever after if they don’t work out differences over finances. Money provides safety and security, so any plan must cover both financial and emotional needs.

At a minimum, you need to agree a household budget and set some financial goals. Beyond that, there is no one right way to manage household finances – it’s up to you. You must, however, understand each other’s financial expectations and try to accommodate the needs of both parties.

Money will always be a hot topic for any couple and shared financial bliss often involves compromises. Some simple give-and-take can move you closer to being on the same financial page. The key is to allow views and opinions to be shared in an atmosphere of mutual trust and respect.

John (JT)Thomas

*This reflects the French influence after the 1066 Norman conquest of England. When William the Conqueror became King of England, French took over as the language of the court and upper-class.

This opinion piece is provided by John (JT) Thomas, a 47- year veteran of the financial services industry and since 1987 a specialist in commercial mortgage funds. Considered by many to be the father of the modern commercial mortgage fund sector, JT helped establish and then managed – for 17 years – what became the largest and most successful commercial mortgage fund in Australia – The Howard Mortgage Trust – with assets exceeding $3 billion. Under JT’s stewardship, investors never lost one cent of their investments and indeed, investors always received competitive monthly returns. JT was also Chair of the $40 billion mortgage trust industry sector working group.

JT has been proudly involved with Princeton for eight years and sits on both the Princeton Credit Committee and the Princeton Compliance Committee as well as being an advisor to the Princeton Board.