Mortgage loan
In the financial world, a mortgage loan (or simply mortgage) is a loan that is used either by purchasers of real estate in order to raise funds in order to purchase real estate or by existing property owners in order to raise funds for any purpose while placing a lien on the property being mortgaged. Using a procedure known as mortgage origination, the loan is "secured" against the borrower's property. The phrase "foreclosure" or "repossession" refers to the legal process through which a lender may take possession of and sell a secured property in order to recover the money owed to it in the event that a borrower defaults on the loan or otherwise fails to comply with the conditions of the loan. The term "mortgage" is derived from a Law French phrase that was used in Britain during the Middle Ages and refers to the promise coming to an end (dying) when either the obligation is satisfied or the property is repossessed by the lender in a foreclosure action. "A borrower offering consideration in the form of collateral for the benefit (loan)" is another way to characterise a mortgage.
People who take out a mortgage on their house or firms that take out a loan on commercial property are both examples of mortgage borrowers (for example, their own business premises, residential property let to tenants, or an investment portfolio). The lender will normally be a financial institution, such as a bank, credit union, or building society, depending on the nation in question, and loan arrangements may be made either directly or indirectly via intermediaries, depending on the situation. Mortgage loan factors such as the amount of the loan, the length of the loan's maturity, the interest rate, the manner of paying off the loan, and other characteristics might differ significantly.. This means that if the borrower goes bankrupt or becomes insolvent, the mortgage lender's rights to the secured property will take precedence over the borrower's other creditors, and the other creditors will only be repaid their debts owed to them from a sale of the secured property if the mortgage lender is fully reimbursed first.
Purchasing a property with the assistance of a mortgage loan is common in many countries. A small percentage of the population has sufficient savings or liquid assets in order to acquire a piece of real estate outright. When house ownership is in great demand, mortgage markets have evolved in nations with significant domestic demand for loans. Alternatively, mortgages can be funded through banking industry (that is, through short-term deposits) or through the capital markets, through a process known as "securitization," which converts pools of mortgages into fungible bonds that can be sold to investors in small denominations through the capital markets.