The
term mortgage (from Law French, lit.
death vow) refers to the legal device used in
securing the property, but it is also commonly
used to refer to the debt secured by the mortgage.
In
most jurisdictions mortgages are strongly associated
with loans secured on real estate rather than
other property (such as ships) and in some cases
only land may be mortgaged. Arranging a mortgage
is seen as the standard method by which individuals
or businesses can purchase residential or commercial
real estate without the need to pay the full
value immediately.
In
many countries it is normal for home purchase
to be funded by a mortgage. In countries where
the demand for home ownership is highest, strong
domestic markets have developed, notably in
Great Britain, Spain and the United States.
Participants and variant terminology
Each legal system tends to share certain concepts
but vary in the terminology and jargon they
use.
In
general terms the main participants in a mortgage
are:
Creditor
The creditor has legal rights to the debt secured
by the mortgage and often makes a loan
to the debtor of the purchase money for the
property. Typically, creditors are banks, insurers
or other financial institutions who make loans
available for the purpose of real estate purchase.
A creditor is sometimes referred to as the mortgagee
or lender.
Debtor
The debtor or debtors must meet the requirements
of the mortgage conditions (and often the loan
conditions) imposed by the creditor in order
to avoid the creditor enacting provisions of
the mortgage to recover the debt. Typically
the debtors will be the individual home-owners,
landlords or businesses who are purchasing their
property by way of a loan. A debtor is sometimes
referred to as the mortgagor, borrower, or obligor
Other
participants
Due to the complicated legal exchange, or conveyance,
of the property, one or both of the main participants
are likely to require legal representation.
The terminology varies with legal jurisdiction;
see lawyer, solicitor and conveyancer.
Because
of the complex nature of many markets the debtor
may approach a mortgage broker or financial
adviser to help them source an appropriate creditor
typically by finding the most competitive loan.
Recently, many consumers (particularly higher
income borrowers) are choosing to work with
Certified Mortgage Planners, industry experts
that work closely with Certified Financial Planners
to align the home finance position(s) of homeowners
with their larger financial portfolio(s).
The
debt is sometimes referred to as the hypothecation,
which may make use of the services of a hypothecary
to assist in the hypothecation. |
