This article on the legal mechanism used to ensure the fulfillment of obligations, including debt repayment, using property. If you are looking for mortgage loans, such as personal housing loans, lending activities and their requirements, see the mortgage loan.
Mortgage A loan allows a person (or company) to borrow money to buy a house or other property. Property shall be a guarantee of the loan. It is the right of the lender to take legal action to put his hand on this property in preparation for selling it at a public auction to meet the right of the sale price if the loan is not received on time. The mortgage is often property-specific. The mortgage consists of two parts: a contract to pay the debt and a discount portfolio on the property to guarantee the debt. The contract specifies the amount of debt, the method of payment, the amount of interest, and any other terms of the agreement. The discount portfolio is a type of guarantee, giving the lender a legal right to claim ownership of the property if the loan is not received. A mortgage term usually refers to the agreement in general. The lender is called the mortgagee, the current borrower.
A person can obtain a mortgage from a bank, insurance company, construction association, savings association, loans or other financial institutions. The interest rate and other terms vary from lender to lender. Most mortgage contracts oblige the current borrower, to repay the loan in monthly installments over twenty years or more or less. Part of each payment goes to the unpaid balance of the loan, the capital is called, and the portion goes to interest. During repayment of the borrower's loan, much of each monthly payment goes to the capital, and little goes to interest. It is gradually repaid by the value of the property that the loan guarantees.
If the borrower does not repay a number of monthly payments or violates any other conditions in the contract, the lender has the right to foreclose foreclosure and foreclosure a regular procedure that allows the lender to seize the property. In this case, the lender can sell the property, take the amount to be repaid, and give the rest to the borrower. He may withdraw more than one loan on the property. If a mortgage is imposed, the second lender takes nothing until the first lender meets all his demands.
Mortgages have always been a common investment for financial institutions because of the surety that includes such loans. During periods of rapid price increases, lenders may hesitate to invest their money in mortgages. Interest rates rise during these periods of inflation, so most lending institutions require a variable interest rate (not fixed during the term of the mortgage). Otherwise, a lender that contracts a 25-year mortgage with an interest rate of 8% may lose the opportunity to lend money later on at a rate of 12%. Inflation also reduces the purchasing power of money. As a result, the money recovered by lenders has less purchasing power than the money they lent.
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In order to attract borrowers during the high inflation period, special conditions are introduced for new borrowers. A fixed-interest mortgage is a fixed-rate mortgage for a given number of years. This would be useful if interest rates increased during those years, but would not be useful if interest rates were to fall. A similar system is the reduced start mortgage. In this type of mortgage, the interest rate is fixed on a reduced value in the first few years, but later becomes higher. This system may be appropriate for a borrower whose income is expected to increase in the coming years. There is also a mortgage system, where the borrower pays monthly payments that cover only the interest of the loan.
The loan amount is theoretically repayable at the end of the loan term. In any event, there is a possibility that the property or property will be sold before this time and the loan is included in the sale price. This means there is less money to buy a new property. A mortgage linked to a life insurance policy is usually known as a mortgage insurance. The installments paid include interest payments and payments from the insurance policy. When the document becomes payable, action is taken to pay the loan. If the borrower dies before the end of the term of the mortgage, then the loan is paid in full. A similar arrangement can be made for the pension system rather than the insurance policy.
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