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Mortgages
Interest Only Mortgage
Capital & Interest Mortgage
UK Mortgage types |
Mortgages
What is a mortgage?
When referring to the word mortgage nowadays, people often mean it
to represent a mortgage loan. A mortgage loan is a loan taken out
through a bank, or any other financial institution, to secure a
property.
As with all loans, mortgages (mortgage loans) are provided by a
financial institution with an interest rate. This is applied by the
lender at a rate that they deem represents the risk involved for
them.
In order to understand some of the jargon associated with mortgage
lending, some definitions of the regular mortgage terminology have
been created.
A mortgage loan is the most popular way worldwide in which people
buy or secure residential or commercial property.
The property is the actual residence that the borrower is trying to
secure or buy with a mortgage.
The purchaser of the property can also be referred to as the
borrower as they are borrowing the mortgage loan in order to buy the
property.
In turn, the institution providing the mortgage can also be referred
to as the lender. For example this could be a bank or a building
society.
The lender applies interest to the mortgage loan by way of a
financial charge for letting the borrower use their money.
This mortgage is made different to other types of loans by a
repossession clause in which they can legitimately seize the
property from the borrower for example, if they cannot keep up with
their mortgage payments and therefore no longer afford to buy the
property.
The above are the main features of a typical mortgage, although
other factors such as where the property is located, the history of
the property or the lenders individual terms can also help define
the mortgage type. |
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