Friday, 30 May 2014

Mortgage - Definition

It turns out that despite the huge amount of advertising and information, many people still do not know the correct definition of a mortgage loan , mistaking it for a loan to build a house. Obviously, this is one of the primary uses of the mortgage, but it is not it is the nature of the financial product.

From the definition because the mortgage is a type of loan, the collateral is established mortgage - not necessarily the other hand, the funds must be used for the construction or renovation. Commonly concedes this error because the funds received as part of a mortgage are very significant, so it is a tool chosen by the person building a house or planning to purchase or overhaul of an apartment. The exact scope of the possible use of the loan is determined in each case by the bank in the credit agreement. Hypothetically, it is therefore possible to limit the use of credit only for building or buying a home, but in practice similar restrictions introduced rare.

The term " mortgage "comes from the distribution of loans by type of security, not by applications. However, the overwhelming majority of loans for construction of a house is just a loan mortgages, which in turn comes from the fact that most of us can not afford such a high loan collateral in a different way than just a mortgage on the new property.

Everything I write is not without reason - they often do not understand the relevant terms relating to the definitions of banking products, we try to find some information about them. Often search ends in failure, not because such information does not exist, but because they ask the wrong questions. The next time you try to find or compare mortgage , you already know how to distinguish it from the loan for the construction or renovation, as well as several other credit products that do not meet your needs, and which also use a mortgage as security for liabilities. On the occasion of the mortgage search: always take into account the quality of the source from which you use and the age of the data - bank offers change frequently, and before being updated in some sites may take some time.

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