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What is Mortgage Loan?


What is Mortgage Loan ?

The loan taken against mortgage of property is called Mortgage Loan. Mortgage is a loan in which property or immovable property is used as collateral. The borrower enters an agreement with the lender (usually a bank) in which the borrower receives a cash advance, then he pays on a fixed time period, unless he fully repays the lender.
The mortgage is legally binding and secures the note in giving the borrower the right to make a legal claim against the home of the borrower, if there is a lapse on the terms of the note.

Mortgages are usually paid in the form of monthly payments, which include interest and principles. Principal is repaying principal amount borrowed, which reduces the balance. On the other hand, interest is the cost of borrowing the original amount for the previous month.

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