What is a Mortgage?
We’re quite lacking in the ‘Knowledge’ section of this website, so we’re doing an entry on mortgage.
We found this excellent article by EDinformatics.com.
So what is a mortgage?
A mortgage (Law French for “dead pledge”) is a device used to create a lien on real estate by contract. It is used as a method by which individuals or businesses can buy residential or commerical property without paying the full value upfront. The borrower (called the mortgagor) uses a mortgage to pledge real property to the lender (called the mortgagee) as security against the debt (also called hypothecation) for the rest of the value of the property. In legal terms, the creation of a mortgage gives the legal title of the land to the mortgagee and an equitable title (called “equity of redemption”) to the mortgagor. The legal title, however, only exists as a security for a debt and does not convey any title or powers associated real property.
The website has more interesting write-ups on the history of mortgage, the mortgage finance industry, mortgage loan types, fixed rate mortgage calculations and even a section on Islamic mortgages.
For the full article (including a glossary of mortgage-related terms), check out the site.
