A conveyance of or lien against property (as for securing a loan) that becomes void upon payment or performance according to stipulated terms
When we ask, what does a mortgage mean, we are crucially asking, what is the purpose of it; what does a mortgage do?
To define a mortgage, therefore, is to say that it enables us to buy a property without having the entire sum readily available. It is a loan of money that you can receive from a bank or building society to buy a house. The mortgage is literally the instrument that secures the bank or lender to loan you the money and will allow them to take possession of the property if you fail to repay the loan.
A security, conveyance, lien, or claim on a property so the lender can take possession of a property if a loan is not repaid. Originating from Old French 'morgage'.
Most people use the words interchangeably. Technically a mortgage is security you give to your lender over your property. While a home loan is a loan the lender gave you to pay for your property.
Read on to understand exactly what a mortgage is, and exactly what a home loan is including the history of mortgages and their root words.
A mortgage (or home loan) is a loan from a bank or non-bank lender given to someone for the purchase of a property, that also entitles the lender security over the property to repossess it if payments are not met.
For those starting out on the property ladder, a mortgage can seem a daunting prospect. For most, a mortgage is the biggest financial commitment that they expect to make in their lives. Once you sign the paperwork, you are locking yourself into repayments for 30 years or so. To learn how to pay off your mortgage faster check out these masterclasses. Although the repayment length can differ, depending on your circumstances.
A lender can approve a mortgage once certain criteria are met. They will determine the level of risk that an individual or group of people have. This ultimately determines the amount that can be borrowed. Different risk levels may also change your mortgage interest rate.
For higher-risk individuals, or for those who choose a no or low deposit home loan, additional fees or mortgage lender’s insurance may apply.
If you're unsure whether a home loan or a mortgage is right for your personal situation, one of our mortgage brokers at mortgage can help. We take a thorough look at your finances and guide you through making decisions that will benefit your future.