What is a mortgage? Anyone interested in mortgage financing will sooner or later be confronted with the concept of mortgage. So many banks offer, for example, a mortgage loan and the interest payable in connection with a construction loan, in many cases, as mortgage rates referred.
But what exactly is it actually a mortgage or what does it include? First of all, it is so that it is a credit security that provides the customer to the bank. As security is the mortgage, therefore also called collateral mortgage, almost exclusively used in connection with a real estate financing.
How The Mortgage Works As Collateral
Mortgage Loans – What is it? As collateral security, the mortgage rates Winnipeg loan falls within the area of mortgage liens. In simple terms, this means that the property to be financed or the land purchased is subject to a mortgage since the bank in question has the right to exploit credit protection in certain cases.
In practice, this would mean that the bank may also order the forced sale of the property if the borrower’s rates cannot pay. The mortgage as collateral is entered in the Land Register, so that at any time it is understandable that the land or the Property is charged with a certain value. In this case, the bank is registered as a creditor in the land register. Only after repayment of the loan will the mortgage be deleted from the land register, so the property is then free of charge. A mortgage letter is usually issued as a proof of the entire mortgage bank.
Difference Between A Mortgage And A Bank Loan
In practice, the mortgage has lost a lot of importance in the past, as the vast majority of banks now accept a basic debt as credit protection instead. This is very similar collateral and differs from the mortgage only a few points. The main difference between mortgage and land charge is that the former is referred to as strictly ancillary, which is not the case with the mortgage. Strictly accessory means in the context that mortgages are associated with the existence of the credit claim.
On the other hand, in the case of the principal debt, the bank can sometimes use this credit security also for other claims against the customer, which have nothing to do with real estate financing. This offers thus far-reaching possibilities, which is certainly also the reason for the fact that this credit security is meanwhile favored by the banks.
What Is The Value Of The Mortgage As Collateral?
Calculate mortgage a question frequently asked by borrowers is related to the mortgage, with what value it is assumed as credit security. Almost all banks have certain valuation rules after they act and also the value of the mortgage. In senior mortgage, which are therefore entered in the first place in the land register, the value is often set at 60 percent of the value of the property.
If, for example, the property to be financed has a current value of EUR 200,000, the first-class mortgage with a value of EUR 120,000 could be assumed. If the loan is higher, this “excess” part would either not secured or the demand with a different credit safety are covered.
The Main Features Are Briefly Summarized:
- It is a credit guarantee in the area of real estate financing
- There is a compelling commitment to the existing requirement (strictly accessory)
- It is entered in the land register in the area of loads and restrictions
- A mortgage letter is issued, which can sometimes also be transferred