Mortgage Secured Long Term Loan Against Property .pdf
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Mortgage - Secured Long Term Loan Against
Mortgage is a secured loan received in exchange of an owned asset or a property. Here are list of terms often
used with mortgages:
Mortgagor(Owner): An individual who mortgages his property/asset for availing loan
Mortgagee(Lender): Bank or financial institution that lends loan in exchange of security.
(owner’s property or asset)
Mortgage period: Agreeable time in which the owner promises to repay the loan amount, failing
which the title of ownership is transferred to the lender
Mortgage bill of sale: Document that records the agreement between owner and the lender. It is a
legal agreement that conveys the conditional right of ownership on an asset or property by its owner to
a lender as security for a loan.
Practically any legally owned property can be mortgaged, although real estate property are the most common.
When personal property (appliances, cars, jewelry, etc.) is mortgaged, it is called a chattel mortgage. In case
of equipment, real property, and vehicles, the right of possession and use of the mortgaged item normally
remains with the mortgagor, unless specified otherwise in the mortgage agreement. In practice, the courts
generally do not automatically enforce right of possession to the lender when it involves dwelling in house.
However, the lender could still claim the possession on certain cases to protect their security interests.
Usually, mortgagor has the right of redeem the title of ownership of property or an asset on payment of the
debt on or before the end of the mortgage period. However when the mortgagor defaults to pay the loan
amount during the specified time, mortgagee could claim the possession of the property and appoint a
representative to manage the property. Alternatively, they could also obtain foreclosure order to take the
possession and sell it off. Mortgages are the most common type of debt instruments since they charge very
lower rate of interest, have pretty straight forward procedures, and have a reasonably long repayment period.
Mortgage come in many forms. Most common forms are fixed-rate mortgage and adjustable rate mortgage. In fixedrate mortgage, the borrower pays the same interest rate for the life of the loan. In adjustable rate mortgage the
interest rate is fixed for initial term, but then it varies with market fluctuations.
Banks are the traditional mortgage lender. Individuals apply for a mortgage at the bank that keeps their
savings accounts, or transact with other banks for the best interest rates and terms. One could also work with
a mortgage broker who works with different lender to negotiate best deal for their client. One could also
transact with credit unions and government agencies that offer mortgages.
Mortgage service providers provides various mortgage loan facilities to bridge expectations of buyers and the
lenders. They bridge for mortgage loan for residential purchases, buy to let mortgage, mortgage insurance
protection and provides expat mortgage for non-UK residents.
Mortgage provides secured long term loan against property or an asset, however the mortgagor must be able
to source the money to pay back the interest to buy back the title of ownership. While mortgaging loans from
brokers and pawn brokers mortgagor must ensure that they are trustworthy and must read all fine points of the
legal mortgage document before proceeding further with the agreement.