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A mortgage is a loan secured by real property, giving the lender the right to foreclose or repossess the property if the borrower defaults.
A mortgage loan is a long-term loan secured by real estate. Individuals or businesses borrow money to purchase property or raise funds for other purposes, while the lender receives a legal claim, or lien, over the property. If the borrower fails to meet the loan terms, the lender may use foreclosure or repossession to sell the property and recover the outstanding debt. Mortgage lenders are typically banks, credit unions, building societies, or other financial institutions, and mortgage loans may also be sold to investors through securitization. Mortgage loans generally involve principal, interest, a repayment term, scheduled payments, and an amortization process. The two primary types are fixed-rate mortgages, where the interest rate remains constant, and adjustable-rate mortgages, where the rate changes according to market conditions. Loan approval depends on factors such as income, employment, credit history, debt-to-income ratio, down payment, property value, and loan-to-value ratio. Mortgage insurance may be required for higher-risk loans, especially those with high loan-to-value ratios. Repayment structures, regulations, taxes, prepayment rules, and the availability of fixed or variable rates differ by country.
A mortgage is a loan secured by real property, giving the lender the right to foreclose or repossess the property if the borrower defaults.
Mortgage payments usually consist of principal and interest and are spread over a long-term amortization period, commonly 15 to 30 years.
Fixed-rate mortgages maintain the same interest rate, while adjustable-rate mortgages change periodically based on a market index.
Loan-to-value ratio, down payment, creditworthiness, income, employment, debt-to-income ratio, and property appraisal are important factors in mortgage approval and pricing.
Mortgage insurance protects the lender against losses and is commonly required when the loan-to-value ratio is high.
Mortgage markets may be funded through bank deposits or capital markets, including the securitization of mortgage pools into mortgage-backed securities.
A loan used to purchase or leverage real estate that is secured by a legal claim on the property.
The original amount borrowed, excluding or sometimes including certain financed costs.
The charge paid to the lender for using borrowed money.
The gradual repayment of a loan through scheduled payments that reduce the outstanding principal over time.
A mortgage whose interest rate remains unchanged for the entire loan term.
A mortgage whose interest rate changes periodically according to specified market conditions or an index.
The percentage calculated by dividing the mortgage amount by the appraised or market value of the property.
The legal process through which a lender takes and sells secured property after borrower default.
The process of evaluating a borrower's finances, creditworthiness, repayment ability, and property value before approving a mortgage.
Insurance that protects the lender against losses if the borrower defaults and the property sale does not cover the debt.
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