Mortgage Terminology


Participants
More terminology


Participants
The mortgage terminology could be really various in the different legal systems and countries but in general the main participants in a mortgage are:

Creditor
The creditor owns the legal rights to the debt secured by the mortgage and most often makes a loan to the debtor. Creditors could be banks, insurers or other financial institutions who secure loans for real estate purchases.
A creditor could be also referred to as a lender or mortgagee.

Debtor
This is the borrower in the mortgage agreement. The debtor(s) should meet the regulations of the loan conditions enforced by the creditor in order to avoid the legal actions that the creditor of the mortgage could perform to recover the debt. Typically the debtors are individual home-owners, businesses or landlords who are purchasing properties with loans.
A debtor could also be referred to as a borrower, mortgagor (mortgager) or obligor.

Other participants
There also could be other participants in the process like lawers, conveyancers or solicitors since some of the main participants (creditors or debtors) could require legal representation due to the complicated legal exchange of the property.
Sometimes, the debt is referred to as hypothecation, which may involve the services of a hypothecary in order to complete the hypothecation.
We should mention that there is another class of participants who also may provide funds for a mortgage - the Life Insurers, Pension Funds, etc.


More terminology
There are more terms described below that could help for better comprehension of the subject.

Advance - the money someone has borrowed plus all of the additional fees.

Base Rate - In the United Kingdom, this is the base interest rate set by the Bank of England.

Bridging Loan - This is a transitory loan that enables someone to purchase his/her new property before his/her old property is sold.

Conveyance - this refers to the legal document transfering the ownership of unregistered land to someone.

Disbursements - These constitutes all the fees of your solicitors, such as land registry, stamp duty, search fees, ...

Early Redemption Charge / Pre-Payment Penalty / Redemption Penalty - the amount of money someone has to pay if he/she pays his/her debt in full but before the time of the mortgage has finished.

Equity - the market value of the property reduced by all of the loans that are still outstanding on it.

Land Registration - a legal document that registers the ownership of land and property.

Freehold - This means full ownership of land/property.

Leasehold - This means ownership of property/land for a specified time period that may be sold independently from the freehold which may be in possession by another person.

Legal Charge - a legal document that holds the data of the rightful proprietor of a property/land.

Mortgage Deed - a legal document stating that the creditor has a legal charge over someone's property.

Mortgage Payment Protection Insurance - This is a kind of insurance that ensures your payment will arrive on time if you become unable to pay the mortgage.

Sealing Fee - a fee paid when the creditor releases the legal charge over someone's property.

Subject To Contract - an agreement made between the seller and the buyer before the actual contract take place.


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