Mortages

A mortgage is a method where people can use their property as security for the payment of a debt. There are two main participants in this process – the creditor and the debtor.

The creditor is the one who holds the legal rights to the debt secured by the mortgage. This debt is often the obligation made by the creditor to repay the loan. The creditor is the one who purchased the property mortgaged. Creditors are usually banks, insurers, or other financial institutions that provide loans for the purpose of real estate. Creditors are sometimes referred to as lenders or as mortgagees.

The debtor is the one who owes the obligation secured by the process. Debtors can be multiple entities at times. The debtor has to fulfill the conditions of the obligation and other specified conditions of the mortgage. If the debtor fails to do that, there will be a foreclosure of the mortgage by the creditor to recover the debt. Usually, the debtors are individual home owners, landlords, or businesses who purchase their property using a loan. A debtor is sometimes known as a borrower, obligor, or the mortgagor.

There are two main types of mortgage – mortgage by demise and mortgage by legal charge. In the former, the creditor owns the mortgaged property till the loan is repaid in full. In the latter, the debtor continues to be the legal owner of the property. However, the creditor gains enough rights over it, like the right to take possession of the property or sell it. To ensure the protection of the lender, it is usually recorded in a public register.

This kind of debt is usually the largest debt owed by the debtor, banks, and other lenders. Hence, creditors investigate the history of real property to check if there are other mortgages already registered on the debtor’s property that might have a higher priority.

Selection
When you select a mortgage, ensure that you select the right one. You should consider factors like your future plans, your financial status, etc., before deciding. It is a personal guarantee that you offer to repay the money you have borrowed to buy your home. Hence, consider all its advantages and disadvantages before you make a decision.

Foreclosure
Typically, a lender may foreclose the mortgaged property if certain conditions are met, and as per local legal requirements, the property may then be sold. Any amount of money received through the sale is then applied to the original debt. The laws on foreclosure vary according to different jurisdictions.

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