Saturday, March 21, 2009

Mortgage General Idea About


Mortgage is a form of hypothecation of property to a bank as a security for a loan. The transferor is called a mortgagor, the transferee a mortgagee, the principle amount and interest are called as mortgage money and the instrument by which the transfer is affected is called a mortgage deed. Mortgage of property gives the lender a right to acquire and sell the property in case of default by the borrower in repayment of the loan and other dues as per the agreed terms and conditions. It creates a legally binding contract between the parties.

A mortgagee has a right to sue the mortgagor if the mortgaged property is totally or partially destroyed. The mortgagee must have given the mortgagor a reasonable opportunity to provide further security to render the security sufficient and the mortgagor has failed to do so. A mortgage is a loan you take out to buy property. Most banks and building societies offer mortgages, as well as specialist mortgage lending companies. If you change lenders but don't move home it's referred to as a remortgage.

In certain countries like U.K. Australia there is more demand for homes. The two ways of measuring cost of borrowing are annual percentage rate (APR) or lender police effective annual rate (LPEAR). An investor borrows funds to diversify investment. The different types of mortgage include simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, Mortgage by deposit of title deeds and Anomalous Mortgage.

The two main types of mortgage are repayment and interest mortgages. In the interest mortgage you can make monthly repayments for a said period but this will only cover the interest of your loan. The option to pay interest only lasts for a specified period, usually 5 to 10 years. Borrowers have the right to pay more that interest if they want to. If the borrower wants to pay only interest every month during interest period, the payment will not include any repayment of principle. The result is that the loan balance will remain unchanged. In Repayment Mortgage, principal as well as interest amount is re-paid every month. In this type of Mortgage the loan amount decreases over time and once the last payment is done the property is yours. The mortgage amount is usually paid in 25 years.

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