A mortgage loan or, simply, mortgage is used either by purchasers of real property to raise funds to purchase real estate, or on the other hand by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged. The lender's rights over the secured property take priority over the borrower's other creditors, which means that if the borrower becomes bankrupt or insolvent, the other creditors might be reimbursed the debts owed to them from a sale of the secured property if the mortgage lender is reimbursed in full first. A mortgage can also be described as "a borrower giving consideration as a security for a benefit (loan)".
The word mortgage is gotten from a Law French term used in Britain in the Middle Ages signifying "demise promise" and refers to the vow finishing when either the commitment is satisfied or the property is taken through foreclosure. Features of mortgage loans such as the size of the loan, development of the loan, interest rate, strategy for satisfying the loan, and other characteristics can fluctuate considerably. In numerous jurisdictions, it is normal for home purchases to be supported by a mortgage loan. Hardly any individuals have enough savings or fluid funds to empower them to purchase property through and through. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have created. Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging business property.
This means a legal mechanism is established which allows the lender to collect and sell the secured property to satisfy the loan in the occasion the borrower defaults on the loan or otherwise fails to keep its terms. Mortgages can either be financed through the financial sector 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. As with other types of loans, mortgages have an interest rate and are scheduled to amortize over a set timeframe, regularly 30 years. A wide range 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.