Mortgage loan

Mortgage loan

A mortgage loan, also referred to as a mortgage, is used by purchasers of realty to lift funds to shop for real estate; by existing property owners to lift funds for any purpose whereas golf shot a lien on the property being encumbered. The loan is "secured" on the borrower's property. This means that a legal mechanism is place in situ that permits the investor to require possession and sell the secured property ("foreclosure" or "repossession") to pay off the loan within the event that the recipient defaults on the loan or otherwise fails to abide by its terms.

The word mortgage is derived from a "Law French" term employed by English lawyers within the Middle Ages meaning "death pledge", and refers to the pledge ending (dying) when either the obligation is consummated or the property is taken through legal proceeding. Mortgage can conjointly be represented as "a recipient giving thought within the variety of a collateral for a profit (loan).

Mortgage borrowers can be people mortgaging their home or they will be businesses mortgaging business property (for example, their own business premises, residential property let to tenants or an investment portfolio). The lender can usually be a monetary establishment, such as a bank, credit union or savings and loan association, depending on the country involved, and the loan arrangements will be made either directly or indirectly through intermediaries.

Features of mortgage loans such as the scale of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics will vary significantly. The lender's rights over the secured property take priority over the recipient's other creditors that means that that if the borrower becomes bankrupt or insolvent, the other creditors can solely be repaid the debts owed to them from an acquisition of the secured property if the mortgage investor is repaid fully 1st.

In many jurisdictions, though not all (Bali, Indonesia being one exception), it is normal for home purchases to be funded by a loan. Few individuals have enough savings or liquid funds to change them to purchase property outright. In countries where the demand for home possession is highest, strong domestic markets for mortgages have developed.