A mortgage is really a method of securing charge on a house of other immovable assets usually for the intended purpose of financing its purchase. The term mortgage derives from the French words mort meaning dead, and gage meaning pledge. The implication was that the house was dead or useless for the borrower if he cannot repay the loan. Generally in most countries it’s quite common to invest in both residential and commercial properties by developing a mortgage.
The primary parties in developing a mortgage will be the lender and the borrower. The lending company is also referred to as the creditor or the mortgage, the main one to whom the house is mortgaged. Similarly the borrower can be referred to as the debtor or the mortgagor, the main one who mortgages the house. Due to the high stakes and the complex legalities involved both parties are often represented by solicitors.
A mortgage usually creates a lien or to the title of the house. It generally does not transfer absolute ownership to the lending company. A mortgage is established by a musical instrument referred to as mortgage deed. Despite having a lien on the house, the lender must take recourse to law to recuperate his funds if the debtor defaults on the payments. A legal process declaring that your debt arrives and that the borrower has defaulted in the payments is necessary prior to the property could be sold.
Mortgage lenders are banks or finance institutions that lend funds to borrowers for the precise purchase of land and property, and secure the loans by using a mortgage on the land or property created within their favor. The borrower needs funds to get the land or property. He expects to cover back the loan alongside interest through the use of the assets in his business or from various other expected income. Mortgage brokers have funds available but cannot leverage the funds to create high returns. Hence both take advantage of the transaction.
Mortgage lenders need protection from the eventuality that the borrower will default in his commitments. Towards this end they obtain the assets mortgaged within their favor. The mortgage is established by way of a legal charge, by which the ownership of the assets remain with the borrower, however the mortgage brokers have the proper to take possession of and also sell the assets. That is referred to as foreclosure.
Mortgage lenders are further protected by the recording of the charge in a public register. This registration helps it be easier to allow them to foreclose the assets if the need arise. This registration serves another purpose aswell. Before lending the funds, mortgage brokers perform a search of the registers to make sure that the assets aren’t already mortgaged.