Mortgage Loan

The mortgage loan is a kind of secured loan. In a mortgage loan the borrower provides a particular property to receive the loan. The loan is provided by the lender against this property. As per the contractual agreement the lender can take away the property if the borrower fails to pay back his loan.

Common Factors of Mortgage Loans
The terms and conditions of the mortgage loans are different in different countries. However, there are some common factors:

Rate of Interest
Frequency of Payment
Term Period
Prepayment
Amount of Payment

The rate of interest of a mortgage loan is the interest rate at which the mortgage loan is provided. Normally the borrower and the lender decide on the interest rate when they finalize the mortgage contract. Frequency of payment is the rate at which the mortgage loan would be paid back. These details are also specified before the loan is provided.

The term period of a mortgage loan is the period of time within which the borrower has to pay back his loan. The borrower has to pay back the mortgage loan within this period otherwise the lender would be entitled to take away the property that has been pledged against this loan.

Types of Mortgage Loans
There are two basic types of mortgage loans – the adjustable rate mortgages and the fixed rate mortgage loans. However, there are some other kinds as well:

Assumed mortgage
Jumbo mortgages
Balloon mortgage
Package loan
Blanket loan
Participation mortgage
Bridge loan
Reverse mortgage
Budget loan
Repayment mortgage
Buydown mortgage
Seasoned mortgage
Commercial loan
Term loan or Interest-only loan
Equity loan
Wraparound mortgage
Foreign National mortgage
Negative amortization loan
Graduated payment mortgage loan
Non-conforming mortgage
Hard money loan

The fixed rate of mortgage loans are those where the rate of interest stays the same throughout the tenure of the loan. In case of the adjustable mortgage loan the rates of interest change within the term period of the loan.

Mortgage Loan Repayment
There are several ways of repaying the mortgage loans:

Capital and Interest
Interest and Partial Capital
Interest Only
Foreclosure and Non-recourse Lending
No Capital or Interest
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Last Updated on : 1st July 2013