Mortgage Loan

MORTGAGE LOAN

A mortgage loan, also referred to as a mortgage is an instrument of debt, covered and protected by the collateral of a specific property, which should be paid back with a pre determined terms of payments by the borrower. Individuals and businesses makes use of mortgages to make large real estate purchases without paying the entire value of the purchase price outright. After a period of many years, the loan is repaid by the borrower, with interest, until he/she eventually owns the property free and clear. Mortgages are also known as "liens against property" or "claims on property." If the borrower fails to keep to the terms of payments of the mortgage, the bank can foreclose.

Mortgage Loan, is used to raise funds to buy real estate by purchasers of real property; or to raise funds for any purpose while putting a lien on the property being mortgaged by existing property owners. The loan is "secured" on the borrower's property. This means that a legal mechanism is put in place which allows the borrower to take possession and sell the secured property ("foreclosure" or "repossession") to pay off the loan in the event that the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is used by English lawyers in the Middle Ages meaning "death pledge", and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure derived from a "Law French" term . Mortgage can also be described as "a borrower giving consideration in the form of a collateral for a facility/benefit (loan).

Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants or an investment portfolio). The lender will typically be a financial institution, such as a bank,credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lender's rights over the secured property take priority over the borrower's other creditors which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.

In many jurisdictions, though not all, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed.‎