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A mortgage loan or simply mortgage () is a
loan In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money avai ...
used either by purchasers of
real property In English English usually refers to: * English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, early medieval England, which has eventually become the World la ...
to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while putting a
lien A lien ( or ) is a form of security interest In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and inv ...

lien
on the property being mortgaged. The loan is " secured" on the borrower's property through a process known as
mortgage origination In consumer lending, mortgage origination, a specialized subset of loan origination, is the process by which a lender works with a borrower to complete a mortgage transaction, resulting in a mortgage loan A mortgage loan or simply mortgage ...
. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property ("
foreclosure Foreclosure is a legal process in which a lender A creditor or lender is a party 300px, '' Hip, Hip, Hurrah!'' (1888) by Peder Severin Krøyer, a painting portraying an artists' party in 19th century Denmark A party is a gathering of ...
" or "
repossession Repossession, colloquially repo, is a "self-help Self-help or self-improvement is a self-guided improvement''APA Dictionary of Physicology'', 1st ed., Gary R. VandenBos, ed., Washington: American Psychological Association, 2007.—economically, ...

repossession
") to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word ''mortgage'' is derived from a
Law French Law French ( nrf, Louai Français, enm, Lawe Frensch) is an archaic language originally based on Old Norman and Anglo-Norman language, Anglo-Norman, but increasingly influenced by Parisian French and, later, English. It was used in the Courts ...
term used in
Britain Britain usually refers to: * United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Telegraph' use Britain as a synonym for the United ...
in the
Middle Ages In the history of Europe The history of Europe concerns itself with the discovery and collection, the study, organization and presentation and the interpretation of past events and affairs of the people of Europe since the beginning of ...
meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as "a borrower giving consideration in the form of a collateral for a benefit (loan)". Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants, or an
investment portfolio In finance, a portfolio is a collection of Investment#In finance, investments. Definition Image:Pareto Efficient Frontier for the Markowitz Portfolio selection problem..png, 200px, Risk/return plot and Pareto-optimal portfolios (in red) The term ...
). The lender will typically be a financial institution, such as a
bank A bank is a financial institution Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), stat ...

bank
,
credit union A credit union, a type of financial institution similar to a commercial bank, is a member-owned financial cooperative, controlled by its members and operated on a not-for-profit basis. Credit unions generally provide services to members simila ...
or
building society A building society is a financial institution Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polit ...
, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lender's rights over the secured property take priority over the borrower's other
creditor A creditor or lender is a party 300px, '' Hip, Hip, Hurrah!'' (1888) by Peder Severin Krøyer, a painting portraying an artists' party in 19th century Denmark A party is a gathering of people who have been invited by a host A host is ...

creditor
s, which means that if the borrower becomes
bankrupt Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditor A creditor or lender is a party 300px, '' Hip, Hip, Hurrah!'' (1888) by Peder Severin Krøyer, a painting portraying an artists' par ...

bankrupt
or
insolvent In accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be used to comp ...
, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first. In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for
home ownership Owner-occupancy or home-ownership is a form of housing tenure in which a person, called the owner-occupier, owner-occupant, or home owner, owns the home A home, or domicile, is a space used as a permanent or semi-permanent residence for a ...
is highest, strong domestic markets for mortgages have developed. Mortgages can either be funded through the banking sector (that is, through short-term deposits) or through the capital markets through a process called "securitization", which converts pools of mortgages into fungible bonds that can be sold to investors in small denominations.


Mortgage loan basics


Basic concepts and legal regulation

According to Anglo-American
property law Property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to , alter, , , ...
, a mortgage occurs when an owner (usually of a
fee simple In English law English law is the common law In law, common law (also known as judicial precedent or judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in writte ...
interest in
realty In English English usually refers to: * English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, early medieval England, which has eventually become the World la ...
) pledges his or her interest (right to the property) as
security Security is freedom from, or resilience against, potential Potential generally refers to a currently unrealized ability. The term is used in a wide variety of fields, from physics Physics is the natural science that studies matter, its El ...
or
collateral Collateral may refer to: Business and finance * Collateral (finance) In loan agreement, lending agreements, collateral is a Borrower, borrower's pledge (law), pledge of specific property to a lender, to Secured loan, secure repayment of a loan. ...
for a loan. Therefore, a mortgage is an
encumbrance An encumbrance is a third party's right to, interest in, or legal liability In law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. ...
(limitation) on the right to the property just as an
easement An easement is a Nonpossessory interest in land, nonpossessory right to use and/or enter onto the real property of another without possessing it. It is "best typified in the right of way which one landowner, A, may enjoy over the land of another ...
would be, but because most mortgages occur as a condition for new loan money, the word ''mortgage'' has become the generic term for a
loan In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money avai ...
secured by such
real property In English English usually refers to: * English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, early medieval England, which has eventually become the World la ...
. As with other types of loans, mortgages have an
interest rate An interest rate is the amount of interest In and , interest is payment from a or deposit-taking financial institution to a or depositor of an amount above repayment of the (that is, the amount borrowed), at a particular rate. It is disti ...
and are scheduled to
amortize Amortization (or amortisation; ) is paying off an amount owed over time by making planned, incremental payments of principal Principal may refer to: Title or rank * Principal (academia) The principal is the chief executive and the chief academ ...
over a set period of time, typically 30 years. All types of real property can be, and usually are, secured with a mortgage and bear an interest rate that is supposed to reflect the lender's risk. Mortgage lending is the primary mechanism used in many countries to finance private ownership of residential and commercial property (see
commercial mortgage A commercial mortgage is a mortgage loan A mortgage loan or simply mortgage () is a loan In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerne ...
s). Although the terminology and precise forms will differ from country to country, the basic components tend to be similar: * Property: the physical residence being financed. The exact form of ownership will vary from country to country and may restrict the types of lending that are possible. *
Mortgage A mortgage loan or simply mortgage () is a loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a ...
: the
security interest In finance Finance is a term for the management, creation, and study of money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in ...
of the lender in the property, which may entail restrictions on the use or disposal of the property. Restrictions may include requirements to purchase
home insurance Home insurance, also commonly called homeowner's insurance (often abbreviated in the US real estate industry as HOI), is a type of property insurance that covers a private residence. It is an insurance policy that combines various personal insuran ...
and
mortgage insurance Mortgage insurance (also known as mortgage guarantee and home-loan insurance) is an insurance policy which compensates lenders or investors in Mortgage-backed security, mortgage-backed securities for losses due to the Default (finance), default of ...
, or pay off outstanding debt before selling the property. *
Borrower A debtor or debitor is a legal entity, legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counter ...

Borrower
: the person borrowing who either has or is creating an ownership interest in the property. *
Lender A creditor or lender is a party A party is a gathering of people who have been invited by a host A host is a person responsible for guests at an event or for providing hospitality during it. Host may also refer to: Places *Host, ...

Lender
: any lender, but usually a
bank A bank is a financial institution Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), stat ...

bank
or other
financial institution Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entit ...
. (In some countries, particularly the United States, Lenders may also be
investor An investor is a person that allocates capital with the expectation of a future financial return (profit) or to gain an advantage (interest). Through this allocated capital most of the time the investor purchases some species of property. Type ...
s who own an interest in the mortgage through a
mortgage-backed security A mortgage-backed security (MBS) is a type of asset-backed security (an Financial instrument, 'instrument') which is secured by a mortgage loan, mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals (a ...
. In such a situation, the initial lender is known as the mortgage originator, which then packages and sells the loan to investors. The payments from the borrower are thereafter collected by a loan servicer.) * Principal: the original size of the loan, which may or may not include certain other costs; as any principal is repaid, the principal will go down in size. *
Interest In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money availa ...

Interest
: a financial charge for use of the lender's money. *
Foreclosure Foreclosure is a legal process in which a lender A creditor or lender is a party 300px, '' Hip, Hip, Hurrah!'' (1888) by Peder Severin Krøyer, a painting portraying an artists' party in 19th century Denmark A party is a gathering of ...
or
repossession Repossession, colloquially repo, is a "self-help Self-help or self-improvement is a self-guided improvement''APA Dictionary of Physicology'', 1st ed., Gary R. VandenBos, ed., Washington: American Psychological Association, 2007.—economically, ...

repossession
: the possibility that the lender has to foreclose, repossess or seize the property under certain circumstances is essential to a mortgage loan; without this aspect, the loan is arguably no different from any other type of loan. * Completion: legal completion of the mortgage deed, and hence the ''start'' of the mortgage. *
Redemption Redemption may refer to: Religion * Redemption (theology), an element of salvation to express deliverance from sin * Redemptive suffering, a Roman Catholic belief that suffering can partially remit punishment for sins if offered to Jesus * Pidyo ...
: final repayment of the amount outstanding, which may be a "natural redemption" at the end of the scheduled term or a lump sum redemption, typically when the borrower decides to sell the property. A closed mortgage account is said to be "redeemed". Many other specific characteristics are common to many markets, but the above are the essential features. Governments usually regulate many aspects of mortgage lending, either directly (through legal requirements, for example) or indirectly (through regulation of the participants or the financial markets, such as the banking industry), and often through state intervention (direct lending by the government, direct lending by state-owned banks, or sponsorship of various entities). Other aspects that define a specific mortgage market may be regional, historical, or driven by specific characteristics of the legal or financial system. Mortgage loans are generally structured as long-term loans, the periodic payments for which are similar to an
annuity An annuity is a series of payments made at equal intervals.Kellison, Stephen G. (1970). ''The Theory of Interest''. Homewood, Illinois: Richard D. Irwin, Inc. p. 45 Examples of annuities are regular deposits to a savings account A savings acco ...
and calculated according to the
time value of money The time value of money is the widely accepted conjecture that there is greater benefit to receiving a sum of money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, ...
formulae. The most basic arrangement would require a fixed monthly payment over a period of ten to thirty years, depending on local conditions. Over this period the principal component of the loan (the original loan) would be slowly paid down through
amortization Amortization (or amortisation; ) is paying off an amount owed over time by making planned, incremental payments of principal Principal may refer to: Title or rank * Principal (academia) The principal is the chief executive and the chief academ ...
. In practice, many variants are possible and common worldwide and within each country. Lenders provide funds against property to earn
interest income Passive income is income that requires no effort to earn and maintain. It is called progressive passive income when the earner expends little effort to grow the income. Examples of passive income include rental income and any business activities i ...
, and generally borrow these funds themselves (for example, by taking
deposits A deposit account is a bank account maintained by a financial institution in which a customer can deposit and withdraw money. Deposit accounts can be savings accounts, Transaction account#Current accounts, current accounts or any of several other ...
or issuing bonds). The price at which the lenders borrow money, therefore, affects the cost of borrowing. Lenders may also, in many countries, sell the mortgage loan to other parties who are interested in receiving the stream of cash payments from the borrower, often in the form of a security (by means of a
securitization Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling ...
). Mortgage lending will also take into account the (perceived) riskiness of the mortgage loan, that is, the likelihood that the funds will be repaid (usually considered a function of the creditworthiness of the borrower); that if they are not repaid, the lender will be able to foreclose on the real estate assets; and the financial,
interest rate risk Interest rate risk is the risk In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty Uncertainty refers to Epistemology, epistemic situations involving imperfect or unknown information. It applies to ...
and time delays that may be involved in certain circumstances.


Mortgage underwriting

During the mortgage loan approval process, a mortgage loan underwriter verifies the financial information that the applicant has provided as to income, employment, credit history and the value of the home being purchased via an appraisal. An appraisal may be ordered. The underwriting process may take a few days to a few weeks. Sometimes the underwriting process takes so long that the provided financial statements need to be resubmitted so they are current. It is advisable to maintain the same employment and not to use or open new credit during the underwriting process. Any changes made in the applicant's credit, employment, or financial information could result in the loan being denied.


Mortgage loan types

There are many types of mortgages used worldwide, but several factors broadly define the characteristics of the mortgage. All of these may be subject to local regulation and legal requirements. * Interest: Interest may be fixed for the life of the loan or variable, and change at certain pre-defined periods; the interest rate can also, of course, be higher or lower. * Term: Mortgage loans generally have a maximum term, that is, the number of years after which an amortizing loan will be repaid. Some mortgage loans may have no amortization, or require full repayment of any remaining balance at a certain date, or even
negative amortization In finance, negative amortization (also known as NegAm, deferred interest or Graduated payment mortgage loan, graduated payment mortgage) occurs whenever the loan payment for any period is less than the interest charged over that period so that the ...
. * Payment amount and frequency: The amount paid per period and the frequency of payments; in some cases, the amount paid per period may change or the borrower may have the option to increase or decrease the amount paid. * Prepayment: Some types of mortgages may limit or restrict prepayment of all or a portion of the loan, or require payment of a penalty to the lender for prepayment. The two basic types of amortized loans are the
fixed rate mortgage A fixed-rate mortgage (FRM) is a mortgage loan A mortgage loan or simply mortgage () is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while p ...
(FRM) and
adjustable-rate mortgage A variable-rate mortgage, adjustable-rate mortgage (ARM), or tracker mortgage is a mortgage loan A mortgage loan or simply mortgage () is a loan In finance, a loan is the lending of money by one or more individuals, organizations, or oth ...
(ARM) (also known as a floating rate or variable rate mortgage). In some countries, such as the United States, fixed rate mortgages are the norm, but floating rate mortgages are relatively common. Combinations of fixed and floating rate mortgages are also common, whereby a mortgage loan will have a fixed rate for some period, for example the first five years, and vary after the end of that period. * In a fixed-rate mortgage, the interest rate, remains fixed for the life (or term) of the loan. In the case of an annuity repayment scheme, the periodic payment remains the same amount throughout the loan. In the case of linear payback, the periodic payment will gradually decrease. * In an adjustable-rate mortgage, the interest rate is generally fixed for a period of time, after which it will periodically (for example, annually or monthly) adjust up or down to some market index. Adjustable rates transfer part of the interest rate risk from the lender to the borrower and thus are widely used where fixed rate funding is difficult to obtain or prohibitively expensive. Since the risk is transferred to the borrower, the initial interest rate may be, for example, 0.5% to 2% lower than the average 30-year fixed rate; the size of the price differential will be related to debt market conditions, including the
yield curve In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money avai ...

yield curve
. The charge to the borrower depends upon the credit risk in addition to the interest rate risk. The mortgage origination and underwriting process involves checking credit scores, debt-to-income, downpayments, assets, and assessing property value.
Jumbo mortgageIn the United States, a jumbo mortgage is a mortgage loan that may have high credit quality, but is in an amount above conventional conforming loan limits.Lemke, Lins and Picard, ''Mortgage-Backed Securities'', Chapter 3 (Thomson West, 2013 ed.). Thi ...
s and
subprime lending In finance Finance is a term for the management, creation, and study of money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, i ...
are not supported by government guarantees and face higher interest rates. Other innovations described below can affect the rates as well.


Loan to value and down payments

Upon making a mortgage loan for the purchase of a property, lenders usually require that the borrower make a down payment; that is, contribute a portion of the cost of the property. This down payment may be expressed as a portion of the value of the property (see below for a definition of this term). The loan to value ratio (or LTV) is the size of the loan against the value of the property. Therefore, a mortgage loan in which the purchaser has made a down payment of 20% has a loan to value ratio of 80%. For loans made against properties that the borrower already owns, the loan to value ratio will be imputed against the estimated value of the property. The loan to value ratio is considered an important indicator of the riskiness of a mortgage loan: the higher the LTV, the higher the risk that the value of the property (in case of foreclosure) will be insufficient to cover the remaining principal of the loan.


Value: appraised, estimated, and actual

Since the value of the property is an important factor in understanding the risk of the loan, determining the value is a key factor in mortgage lending. The value may be determined in various ways, but the most common are: # Actual or transaction value: this is usually taken to be the purchase price of the property. If the property is not being purchased at the time of borrowing, this information may not be available. # Appraised or surveyed value: in most jurisdictions, some form of appraisal of the value by a licensed professional is common. There is often a requirement for the lender to obtain an official appraisal. # Estimated value: lenders or other parties may use their own internal estimates, particularly in jurisdictions where no official appraisal procedure exists, but also in some other circumstances.


Payment and debt ratios

In most countries, a number of more or less standard measures of creditworthiness may be used. Common measures include payment to income (mortgage payments as a percentage of gross or net income); debt to income (all debt payments, including mortgage payments, as a percentage of income); and various net worth measures. In many countries,
credit score A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness A credit risk is risk of default (finance), default on a debt that may arise from a borrower failing to make requi ...
s are used in lieu of or to supplement these measures. There will also be requirements for documentation of the creditworthiness, such as income tax returns, pay stubs, etc. the specifics will vary from location to location. Income tax incentives usually can be applied in forms of tax refunds or tax deduction schemes. The first implies that income tax paid by individual taxpayers will be refunded to the extent of interest on mortgage loans taken to acquire residential property. Income tax deduction implies lowering tax liability to the extent of interest rate paid for the mortgage loan. Some lenders may also require a potential borrower have one or more months of "reserve assets" available. In other words, the borrower may be required to show the availability of enough assets to pay for the housing costs (including mortgage, taxes, etc.) for a period of time in the event of the job loss or other loss of income. Many countries have lower requirements for certain borrowers, or "no-doc" / "low-doc" lending standards that may be acceptable under certain circumstances.


Standard or conforming mortgages

Many countries have a notion of standard or conforming mortgages that define a perceived acceptable level of risk, which may be formal or informal, and may be reinforced by laws, government intervention, or market practice. For example, a standard mortgage may be considered to be one with no more than 70–80% LTV and no more than one-third of gross income going to mortgage debt. A standard or conforming mortgage is a key concept as it often defines whether or not the mortgage can be easily sold or securitized, or, if non-standard, may affect the price at which it may be sold. In the United States, a conforming mortgage is one which meets the established rules and procedures of the two major government-sponsored entities in the housing finance market (including some legal requirements). In contrast, lenders who decide to make nonconforming loans are exercising a higher risk tolerance and do so knowing that they face more challenge in reselling the loan. Many countries have similar concepts or agencies that define what are "standard" mortgages. Regulated lenders (such as banks) may be subject to limits or higher-risk weightings for non-standard mortgages. For example, banks and mortgage brokerages in Canada face restrictions on lending more than 80% of the property value; beyond this level, mortgage insurance is generally required.


Foreign currency mortgage

In some countries with currencies that tend to depreciate, foreign currency mortgages are common, enabling lenders to lend in a stable foreign currency, whilst the borrower takes on the
currency risk A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, the plentiful money bags handed t ...
that the currency will depreciate and they will therefore need to convert higher amounts of the domestic currency to repay the loan.


Repaying the mortgage

In addition to the two standard means of setting the ''cost'' of a mortgage loan (fixed at a set interest rate for the term, or variable relative to market interest rates), there are variations in ''how'' that cost is paid, and how the loan itself is repaid. Repayment depends on locality, tax laws and prevailing culture. There are also various mortgage repayment structures to suit different types of borrower.


Principal and interest

The most common way to repay a secured mortgage loan is to make regular payments toward the principal and interest over a set term. This is commonly referred to as (self)
amortization Amortization (or amortisation; ) is paying off an amount owed over time by making planned, incremental payments of principal Principal may refer to: Title or rank * Principal (academia) The principal is the chief executive and the chief academ ...
in the U.S. and as a repayment mortgage in the UK. A mortgage is a form of
annuity An annuity is a series of payments made at equal intervals.Kellison, Stephen G. (1970). ''The Theory of Interest''. Homewood, Illinois: Richard D. Irwin, Inc. p. 45 Examples of annuities are regular deposits to a savings account A savings acco ...
(from the perspective of the lender), and the calculation of the periodic payments is based on the
time value of money The time value of money is the widely accepted conjecture that there is greater benefit to receiving a sum of money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, ...
formulas. Certain details may be specific to different locations: interest may be calculated on the basis of a 360-day year, for example; interest may be
compounded
compounded
daily, yearly, or semi-annually; prepayment penalties may apply; and other factors. There may be legal restrictions on certain matters, and consumer protection laws may specify or prohibit certain practices. Depending on the size of the loan and the prevailing practice in the country the term may be short (10 years) or long (50 years plus). In the UK and U.S., 25 to 30 years is the usual maximum term (although shorter periods, such as 15-year mortgage loans, are common). Mortgage payments, which are typically made monthly, contain a repayment of the principal and an interest element. The amount going toward the principal in each payment varies throughout the term of the mortgage. In the early years the repayments are mostly interest. Towards the end of the mortgage, payments are mostly for principal. In this way, the payment amount determined at outset is calculated to ensure the loan is repaid at a specified date in the future. This gives borrowers assurance that by maintaining repayment the loan will be cleared at a specified date if the interest rate does not change. Some lenders and 3rd parties offer a bi-weekly mortgage payment program designed to accelerate the payoff of the loan. Similarly, a mortgage can be ended before its scheduled end by paying some or all of the remainder prematurely, called curtailment. An
amortization schedule An amortization schedule is a table detailing each periodic payment on an amortizing loan (typically a mortgage loan, mortgage), as generated by an amortization calculator. Amortization refers to the process of paying off a debt (often from a loan ...
is typically worked out taking the principal left at the end of each month, multiplying by the monthly rate and then subtracting the monthly payment. This is typically generated by an
amortization calculator An amortization calculator is used to determine the periodic payment amount due on a loan In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned wi ...
using the following formula: :A =P\cdot\frac where: : A is the periodic amortization payment : P is the principal amount borrowed : r is the rate of interest expressed as a fraction; for a monthly payment, take the ( Annual Rate)/12 : n is the number of payments; for monthly payments over 30 years, 12 months x 30 years = 360 payments.


Interest only

The main alternative to a principal and interest mortgage is an interest-only mortgage, where the principal is not repaid throughout the term. This type of mortgage is common in the UK, especially when associated with a regular investment plan. With this arrangement regular contributions are made to a separate investment plan designed to build up a lump sum to repay the mortgage at maturity. This type of arrangement is called an ''investment-backed mortgage'' or is often related to the type of plan used:
endowment mortgageAn endowment mortgage is a mortgage loan A mortgage loan or simply mortgage () is a loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The ...
if an endowment policy is used, similarly a
personal equity plan {{Use dmy dates, date=December 2011 A personal equity plan (PEP) was a form of tax-privileged investment account in the United Kingdom, available between 1986 and 1999. History The plans were introduced by Nigel Lawson in the 1986 budget to encour ...
(PEP) mortgage,
Individual Savings Account An individual savings account (ISA; ) is a class of retail investment arrangement available to residents of the United Kingdom. First introduced in 1999, the accounts have favourable tax status. Payments into the account are made from after-tax inc ...
(ISA) mortgage or pension mortgage. Historically, investment-backed mortgages offered various tax advantages over repayment mortgages, although this is no longer the case in the UK. Investment-backed mortgages are seen as higher risk as they are dependent on the investment making sufficient return to clear the debt. Until recently it was not uncommon for interest only mortgages to be arranged without a repayment vehicle, with the borrower gambling that the property market will rise sufficiently for the loan to be repaid by trading down at retirement (or when rent on the property and inflation combine to surpass the interest rate).


Interest-only lifetime mortgage

Recent
Financial Services Authority The Financial Services Authority (FSA) was a quasi-judicial body A quasi-judicial body is a non-judicial body which can interpret law. It is an entity such as an Arbitration panel or tribunal board, that can be a public administrative agency but ...
guidelines to UK lenders regarding interest-only mortgages has tightened the criteria on new lending on an interest-only basis. The problem for many people has been the fact that no repayment vehicle had been implemented, or the vehicle itself (e.g. endowment/ISA policy) performed poorly and therefore insufficient funds were available to repay balance at the end of the term. Moving forward, the FSA under the Mortgage Market Review (MMR) have stated there must be strict criteria on the repayment vehicle being used. As such the likes of Nationwide and other lenders have pulled out of the interest-only market. A resurgence in the equity release market has been the introduction of interest-only lifetime mortgages. Where an interest-only mortgage has a fixed term, an interest-only lifetime mortgage will continue for the rest of the mortgagors life. These schemes have proved of interest to people who do like the roll-up effect (compounding) of interest on traditional
equity release Equity release is a means of retaining use of a house or other object which has capital value, while also obtaining a lump sum or a steady stream of income Income is the consumption and saving opportunity gained by an entity within a specified tim ...
schemes. They have also proved beneficial to people who had an interest-only mortgage with no repayment vehicle and now need to settle the loan. These people can now effectively remortgage onto an interest-only lifetime mortgage to maintain continuity. Interest-only lifetime mortgage schemes are currently offered by two lenders – Stonehaven and more2life. They work by having the options of paying the interest on a monthly basis. By paying off the interest means the balance will remain level for the rest of their life. This market is set to increase as more retirees require finance in retirement.


Reverse mortgages

For older borrowers (typically in retirement), it may be possible to arrange a mortgage where neither the principal nor interest is repaid. The interest is rolled up with the principal, increasing the debt each year. These arrangements are variously called
reverse mortgageA reverse mortgage is a mortgage loan, usually secured by a residential property, that enables the borrower to access the unencumbered value of the property. The loans are typically promoted to older homeowners and typically do not require monthly mo ...
s, lifetime mortgages or ''equity release mortgages'' (referring to
home equity Home equity is the market value of a homeowner's Encumbrance, unencumbered interest in their real property, that is, the difference between the home's fair market value and the outstanding balance of all liens on the property. The property's Owner ...
), depending on the country. The loans are typically not repaid until the borrowers are deceased, hence the age restriction. Through the
Federal Housing Administration The Federal Housing Administration (FHA) is a United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It con ...
, the U.S. government insures reverse mortgages via a program called the HECM (Home Equity Conversion Mortgage). Unlike standard mortgages (where the entire loan amount is typically disbursed at the time of loan closing) the HECM program allows the homeowner to receive funds in a variety of ways: as a one time lump sum payment; as a monthly tenure payment which continues until the borrower dies or moves out of the house permanently; as a monthly payment over a defined period of time; or as a credit line. For further details, see ''
equity release Equity release is a means of retaining use of a house or other object which has capital value, while also obtaining a lump sum or a steady stream of income Income is the consumption and saving opportunity gained by an entity within a specified tim ...
''.


Interest and partial principal

In the U.S. a partial amortization or balloon loan is one where the amount of monthly payments due are calculated (amortized) over a certain term, but the outstanding balance on the principal is due at some point short of that term. In the UK, a partial repayment mortgage is quite common, especially where the original mortgage was investment-backed.


Variations

Graduated payment mortgage loanA graduated payment mortgage loan, often referred to as GPM, is a mortgage loan, mortgage with low initial monthly payments which gradually increase over a specified time frame. These plans are mostly geared towards young people who cannot afford lar ...
s have increasing costs over time and are geared to young borrowers who expect wage increases over time.
Balloon payment mortgage A balloon payment mortgage is a mortgage which does not fully amortize Amortization (or amortisation; ) is paying off an amount owed over time by making planned, incremental payments of principal and interest Interest, in finance and economics ...
s have only partial amortization, meaning that amount of monthly payments due are calculated (amortized) over a certain term, but the outstanding principal balance is due at some point short of that term, and at the end of the term a
balloon payment A balloon payment mortgage is a mortgage A mortgage loan or simply mortgage () is a loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. Th ...
is due. When interest rates are high relative to the rate on an existing seller's loan, the buyer can consider assuming the seller's mortgage. A wraparound mortgage is a form of
seller financing Seller financing is a loan provided by the Sales, seller of a property or business to the Buyer, purchaser. When used in the context of residential real estate, it is also called "bond-for-title" or "owner financing." Usually, the purchaser will ma ...
that can make it easier for a seller to sell a property. A biweekly mortgage has payments made every two weeks instead of monthly. Budget loans include taxes and insurance in the mortgage payment; package loans add the costs of furnishings and other personal property to the mortgage. Buydown mortgages allow the seller or lender to pay something similar to
points Point or points may refer to: Places * Point, Lewis, a peninsula in the Outer Hebrides, Scotland * Point, Texas, a city in Rains County, Texas, United States * Point, the NE tip and a ferry terminal of Lismore, Scotland, Lismore, Inner Hebrides, ...
to reduce interest rate and encourage buyers. Homeowners can also take out
equity loanAn equity loan refers to lending secured by property. United Kingdom In the UK an equity loan is additional borrowing, normally secured as a subsequent charge, as a top-up to the amount a home owner/purchaser can borrow from a main mortgage prov ...
s in which they receive cash for a mortgage debt on their house.
Shared appreciation mortgage A shared appreciation mortgage or SAM is a mortgage in which the lender agrees to receive some or all of the repayment in the form of a share of the increase in value (the appreciation) of the property. In the UK A shared appreciation mortgage is ...
s are a form of
equity release Equity release is a means of retaining use of a house or other object which has capital value, while also obtaining a lump sum or a steady stream of income Income is the consumption and saving opportunity gained by an entity within a specified tim ...
. In the US, foreign nationals due to their unique situation face Foreign National mortgage conditions.
Flexible mortgage The term flexible mortgage refers to a residential mortgage loan A mortgage loan or simply mortgage () is a loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals ...
s allow for more freedom by the borrower to skip payments or prepay. Offset mortgages allow deposits to be counted against the mortgage loan. In the UK there is also the
endowment mortgageAn endowment mortgage is a mortgage loan A mortgage loan or simply mortgage () is a loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The ...
where the borrowers pay interest while the principal is paid with a life insurance policy.
Commercial mortgage A commercial mortgage is a mortgage loan A mortgage loan or simply mortgage () is a loan In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerne ...
s typically have different interest rates, risks, and contracts than personal loans. Participation mortgages allow multiple investors to share in a loan. Builders may take out blanket loans which cover several properties at once.
Bridge loan A bridge loan is a type of short-term loan In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and inves ...
s may be used as temporary financing pending a longer-term loan.
Hard money loan A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than ...
s provide financing in exchange for the mortgaging of real estate collateral.


Foreclosure and non-recourse lending

In most jurisdictions, a lender may
foreclose Foreclosure is a legal process in which a lender A creditor or lender is a party A party is a gathering of people who have been invited by a host A host is a person responsible for guests at an event or for providing hospitali ...
the mortgaged property if certain conditions occur – principally, non-payment of the mortgage loan. Subject to local legal requirements, the property may then be sold. Any amounts received from the sale (net of costs) are applied to the original debt. In some jurisdictions, mortgage loans are non-recourse loans: if the funds recouped from sale of the mortgaged property are insufficient to cover the outstanding debt, the lender may not have recourse to the borrower after foreclosure. In other jurisdictions, the borrower remains responsible for any remaining debt. In virtually all jurisdictions, specific procedures for foreclosure and sale of the mortgaged property apply, and may be tightly regulated by the relevant government. There are strict or judicial foreclosures and non-judicial foreclosures, also known as power of sale foreclosures. In some jurisdictions, foreclosure and sale can occur quite rapidly, while in others, foreclosure may take many months or even years. In many countries, the ability of lenders to foreclose is extremely limited, and mortgage market development has been notably slower.


National differences

A study issued by the UN
Economic Commission for Europe The United Nations Economic Commission for Europe (ECE or UNECE) is one of the five regional commissions under the jurisdiction of the United Nations Economic and Social Council The United Nations Economic and Social Council (ECOSOC; french: Co ...
compared German, US, and Danish mortgage systems. The German Bausparkassen have reported nominal interest rates of approximately 6 per cent per annum in the last 40 years (as of 2004). German Bausparkassen (savings and loans associations) are not identical with banks that give mortgages. In addition, they charge administration and service fees (about 1.5 per cent of the loan amount). However, in the United States, the average interest rates for fixed-rate mortgages in the housing market started in the tens and twenties in the 1980s and have (as of 2004) reached about 6 per cent per annum. However, gross borrowing costs are substantially higher than the nominal interest rate and amounted for the last 30 years to 10.46 per cent. In Denmark, similar to the United States mortgage market, interest rates have fallen to 6 per cent per annum. A risk and administration fee amounts to 0.5 per cent of the outstanding debt. In addition, an acquisition fee is charged which amounts to one per cent of the principal.


United States

The mortgage industry of the United States is a major financial sector. The
federal government A federation (also known as a federal state) is a political entity A polity is an identifiable political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, ...
created several programs, or
government sponsored entities A state-owned enterprise (SOE) or government-owned enterprise (GOE) is a business enterprise where the government or state has significant control through full, majority, or significant minority ownership. Defining characteristics of SOEs are ...
, to foster mortgage lending, construction and encourage home ownership. These programs include the
Government National Mortgage Association The Government National Mortgage Association (GNMA), or Ginnie Mae, is a government-owned corporation A state-owned enterprise (SOE) or government-owned enterprise (GOE) is a business enterprise Business is the activity of making one ...
(known as Ginnie Mae), the
Federal National Mortgage Association The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression The Grea ...
(known as Fannie Mae) and the
Federal Home Loan Mortgage Corporation The Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac, is a public government-sponsored enterprise (GSE), headquartered in Tyson's Corner, Virginia, Tysons Corner, Virginia.National Mortgage Crisis of the 1930s The National Mortgage Crisis of the 1930s was a Depression-era crisis in the United States characterized by high-default rates and soaring loan-to-value ratios in the residential housing market. Rapid expansion in the residential non-farm housing ...
, the
savings and loan crisisThe savings and loan crisis of the 1980s and 1990s (commonly dubbed the S&L crisis) was the failure of 1,043 out of the 3,234 savings and loan associations (S&Ls) in the United States from 1986 to 1995. An S&L or "thrift" is a financial institution t ...
of the 1980s and 1990s and the subprime mortgage crisis of 2007 which led to the 2010 United States foreclosure crisis, 2010 foreclosure crisis. In the United States, the mortgage loan involves two separate documents: the mortgage note (a promissory note) and the security interest evidenced by the "mortgage" document; generally, the two are assignment (law), assigned together, but if they are split traditionally the holder of the note and not the mortgage has the right to foreclose. For example, Fannie Mae promulgates a standard form contract Multistate Fixed-Rate Note 3200 and also separate security agreement, security instrument mortgage forms which vary by state.


History in the United States

The idea of purchasing land is a relatively new idea. The idea of credit being used to purchase land originated with the British colonies in the future United States. The colonists did not give indigenous people already living in America any money for the land they took from them. This was not the only shocking difference between pre-colonized America and post-colonized America. There were huge environmental and biological changes, which led to social, economic, and political changes. There was new types of violence and diseases brought to America. The colonists traded with “wampum,” which was a string of shell beads in different colors and shells. White ones were called wompi, black ones were called sucka uhock. Round clams were worth twice as much as the white wompi shells. They were around one-eighth of an inch in diameter and one-quarter inch in length. Colonists attempted to trade with indigenous people for skins by growing corn. But corn could not get the colonists the best skins, such as beaver skins. The shells were chosen to be used as money because of the symbolic meaning they held for the tribes. Indigenous people believed the shells came from a type of God. The shells could even be talked into to keep words and stories. On the colonists' side, there was also a significance that the indigenous people did not understand. Colonists from England actively pursued trade with the indigenous people, and adopted their ideas for trade. The English originally were surprised to see that people did not automatically follow the trading customs of England. As more and more colonists came to America, the indigenous people lost some of their power. They began to stockpile goods that they knew the colonists would want to keep their power in the trade. As colonists expanded into new spaces, the power dynamic got worse for the indigenous people. The colonists began to exploit the differences between the groups of how important certain goods were. They created debt around the idea of purchasing land. William Pynchon, a settler in what is currently Connecticut, used wampum to gain an advantage in the fur trade. He gave out credit to settlers who helped him create wampum. After a while of the settlers being in the United States, land became its own kind of money. This assisted the colonists in taking the land from the indigenous people.


Canada

In Canada, the Canada Mortgage and Housing Corporation (CMHC) is the country's national housing agency, providing mortgage loan insurance, mortgage-backed securities, housing policy and programs, and housing research to Canadians. It was created by the federal government in 1946 to address the country's post-war housing shortage, and to help Canadians achieve their homeownership goals. The most common mortgage in Canada is the five-year fixed-rate closed mortgage, as opposed to the U.S. where the most common type is the 30-year fixed-rate open mortgage. Throughout the subprime mortgage crisis, financial crisis and the ensuing recession, Canada's mortgage market continued to function well, partly due to the residential mortgage market's policy framework, which includes an effective regulatory and supervisory regime that applies to most lenders. Since the crisis, however, the low interest rate environment that has arisen has contributed to a significant increase in mortgage debt in the country. In April 2014, the Office of the Superintendent of Financial Institutions (OSFI) released guidelines for mortgage insurance providers aimed at tightening standards around underwriting and risk management. In a statement, the OSFI has stated that the guideline will “provide clarity about best practices in respect of residential mortgage insurance underwriting, which contribute to a stable financial system.” This comes after several years of federal government scrutiny over the CMHC, with former Finance Minister Jim Flaherty musing publicly as far back as 2012 about privatizing the Crown corporation. In an attempt to cool down the real estate prices in Canada, Ottawa introduced a mortgage stress test effective 17 October 2016. Under the stress test, every home buyer who wants to get a mortgage from any federally regulated lender should undergo a test in which the borrower's affordability is judged based on a rate that is not lower than a stress rate set by the Bank of Canada. For high-ratio mortgage (loan to value of more than 80%), which is insured by Canada Mortgage and Housing Corporation, the rate is the maximum of the stress test rate and the current target rate. However, for uninsured mortgage, the rate is the maximum of the stress test rate and the target interest rate plus 2%. This stress test has lowered the maximum mortgage approved amount for all borrowers in Canada. The stress-test rate consistently increased until its peak of 5.34% in May 2018 and it was not changed until July 2019 in which for the first time in three years it decreased to 5.19%. This decision may reflect the push-back from the real-estate industry as well as the introduction of the Canada Mortgage and Housing Corporation, first-time home buyer incentive program (FTHBI) by the Canadian government in the 2019 Canadian federal budget. Because of all the criticisms from real estate industry, Canada finance minister Bill Morneau ordered to review and consider changes to the mortgage stress test in December 2019.


United Kingdom

The mortgage industry of the United Kingdom has traditionally been dominated by building society, building societies, but from the 1970s the share of the new mortgage loans market held by building societies has declined substantially. Between 1977 and 1987, the share fell from 96% to 66% while that of banks and other institutions rose from 3% to 36%. There are currently over 200 significant separate financial organizations supplying mortgage loans to house buyers in Britain. The major lenders include building societies, banks, specialized mortgage corporations, insurance companies, and pension funds. In the UK variable-rate mortgages are more common than in the United States. This is in part because mortgage loan financing relies less on fixed income securitization, securitized assets (such as mortgage-backed security, mortgage-backed securities) than in the United States, Denmark, and Germany, and more on retail savings deposit account, deposits like Australia and Spain. Thus, lenders prefer variable-rate mortgages to fixed rate ones and whole-of-term fixed rate mortgages are generally not available. Nevertheless, in recent years fixing the rate of the mortgage for short periods has become popular and the initial two, three, five and, occasionally, ten years of a mortgage can be fixed. From 2007 to the beginning of 2013 between 50% and 83% of new mortgages had initial periods fixed in this way. Home ownership rates are comparable to the United States, but overall default rates are lower. Prepayment penalties during a fixed rate period are common, whilst the United States has discouraged their use. Like other European countries and the rest of the world, but unlike most of the United States, mortgages loans are usually not nonrecourse debt, meaning debtors are liable for any loan deficiencies after foreclosure. The customer-facing aspects of the residential mortgage sector are regulated by the Financial Conduct Authority (FCA), and lenders' financial probity is overseen by a separate regulator, the Prudential Regulation Authority (United Kingdom), Prudential Regulation Authority (PRA) which is part of the Bank of England. The FCA and PRA were established in 2013 with the aim of responding to criticism of regulatory failings highlighted by the financial crisis of 2007–2008 and its aftermath.


Continental Europe

In most of Western Europe (except Denmark, the Netherlands and Germany), variable-rate mortgages are more common, unlike the fixed-rate mortgage common in the United States. Much of Europe has home ownership rates comparable to the United States, but overall default rates are lower in Europe than in the United States. Mortgage loan financing relies less on securitizing mortgages and more on formal government guarantees backed by covered bonds (such as the Pfandbriefe) and deposit account, deposits, except Denmark and Germany where asset-backed security, asset-backed securities are also common. Prepayment penalties are still common, whilst the United States has discouraged their use. Unlike much of the United States, mortgage loans are usually not nonrecourse debt. Within the European Union, covered bonds market volume (covered bonds outstanding) amounted to about EUR 2 trillion at year-end 2007 with Germany, Denmark, Spain, and France each having outstandings above 200,000 EUR million. Pfandbrief-like securities have been introduced in more than 25 European countries—and in recent years also in the U.S. and other countries outside Europe—each with their own unique law and regulations.


Recent trends

On July 28, 2008, US Treasury Secretary Henry Paulson announced that, along with four large U.S. banks, the Treasury would attempt to kick start a market for these securities in the United States, primarily to provide an alternative form of mortgage-backed securities. Similarly, in the UK "the Government is inviting views on options for a UK framework to deliver more affordable long-term fixed-rate mortgages, including the lessons to be learned from international markets and institutions". George Soros's October 10, 2008 ''The Wall Street Journal'' editorial promoted the Danish mortgage market model.


Malaysia

Mortgages in Malaysia can be categorised into 2 different groups: conventional home loan and Islamic home loan. Under the conventional home loan, banks normally charge a fixed interest rate, a variable interest rate, or both. These interest rates are tied to a base rate (individual bank's benchmark rate). For Islamic home financing, it follows the Sharia Law and comes in 2 common types: Bai’ Bithaman Ajil (BBA) or Musharakah Mutanaqisah (MM). Bai' Bithaman Ajil is when the bank buys the property at current market price and sells it back to you at a much higher price. Musharakah Mutanaqisah is when the bank buys the property together with you. You will then slowly buy the bank's portion of the property through rental (whereby a portion of the rental goes to paying for the purchase of a part of the bank's share in the property until the property comes to your complete ownership).


Islamic countries

Islamic Sharia law prohibits the payment or receipt of interest, meaning that Muslims cannot use conventional mortgages. However, real estate is far too expensive for most people to buy outright using cash: Islamic banking and finance, Islamic mortgages solve this problem by having the property change hands twice. In one variation, the bank will buy the house outright and then act as a landlord. The homebuyer, in addition to paying economic rent, rent, will pay a contribution towards the purchase of the property. When the last payment is made, the property changes hands. Typically, this may lead to a higher final price for the buyers. This is because in some countries (such as the United Kingdom and India) there is a stamp duty which is a tax charged by the government on a change of ownership. Because ownership changes twice in an Islamic mortgage, a stamp tax may be charged twice. Many other jurisdictions have similar transaction taxes on change of ownership which may be levied. In the United Kingdom, the dual application of stamp duty in such transactions was removed in the Finance Act 2003 in order to facilitate Islamic mortgages. An alternative scheme involves the bank reselling the property according to an hire purchase, installment plan, at a price higher than the original price. Both of these methods compensate the lender as if they were charging interest, but the loans are structured in a way that in name they are not, and the lender shares the financial risks involved in the transaction with the homebuyer.


Mortgage insurance

Mortgage insurance is an insurance policy designed to protect the mortgagee (lender) from any default by the mortgagor (borrower). It is used commonly in loans with a loan-to-value ratio over 80%, and employed in the event of
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and
repossession Repossession, colloquially repo, is a "self-help Self-help or self-improvement is a self-guided improvement''APA Dictionary of Physicology'', 1st ed., Gary R. VandenBos, ed., Washington: American Psychological Association, 2007.—economically, ...

repossession
. This policy is typically paid for by the borrower as a component to final nominal (note) rate, or in one lump sum up front, or as a separate and itemized component of monthly mortgage payment. In the last case, mortgage insurance can be dropped when the lender informs the borrower, or its subsequent assigns, that the property has appreciated, the loan has been paid down, or any combination of both to relegate the loan-to-value under 80%. In the event of repossession, banks, investors, etc. must resort to selling the property to recoup their original investment (the money lent) and are able to dispose of hard assets (such as real estate) more quickly by reductions in price. Therefore, the mortgage insurance acts as a hedge should the repossessing authority recover less than full and fair market value for any hard asset.


See also


General, or related to more than one nation

*
Commercial mortgage A commercial mortgage is a mortgage loan A mortgage loan or simply mortgage () is a loan In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerne ...
*Mortgage analytics *No Income No Asset (NINA) *Nonrecourse debt *Refinancing *Second mortgage, Second Mortgage


Related to the United Kingdom

*Buy to let *Mortgage cashback *Remortgage *UK mortgage terminology


Related to the United States

*Commercial lender (US) – a term for a lender collateralizing non-residential properties. *eMortgages *FHA loan – Relating to the U.S. Federal Housing Administration *Fixed rate mortgage calculations (USA) *Location Efficient Mortgage – a type of mortgage for urban areas *Mortgage assumption *pre-approval – U.S. mortgage terminology *pre-qualification – U.S. mortgage terminology *Predatory mortgage lending *VA loan – Relating to the U.S. United States Department of Veterans Affairs, Department of Veterans Affairs.


Other nations

*Danish mortgage market *Hypothec - equivalent in civil law (legal system), civil law countries *Mortgage Investment Corporation


Legal details

*Deed – legal aspects *Mechanics lien – a legal concept *Perfection (law), Perfection – applicable legal filing requirements


References


External links

*
Mortgages: For Home Buyers and Homeowners
at USA.gov
Australian Securities & Investments Commission (ASIC) Home Loans
{{Authority control Mortgage, Loans