Mortgage Deed Definition
A loan that uses personal property, such as a house, as collateral is known as a mortgage. Buyers turn to lenders to secure money for a home, and they will find the mortgage deed an important part of the loan process.
Other People Are Reading
-
Function
-
The mortgage deed is the physical contract that lists the terms of the mortgage loan. Both lender (the financial institution) and borrower (the homeowner) sign the deed to indicate their agreement to the terms of the mortgage. The borrower gives the lender rights to the property as security for the loan.
Significance
-
The mortgage deed is a legally binding agreement. Both lenders and borrowers can take action against the other party should they fail to meet the terms of the contract. For example, the deed may outline when the borrower must make payments, how much those payments will be and any financial interest on the loan.
-
Benefits
-
Lenders and borrowers can refer to the deed to clarify the terms of the mortgage agreement. Once both parties have agreed to the contract, the terms cannot be changed unless both parties agree to alter the mortgage. This offers a measure of security to both lender and borrower.
Warning
-
Both parties are subject to legal action if they do not abide by the terms of the mortgage deed. For example, if the homeowner does not make payments on time, she may lose her home to the bank as stated in the mortgage deed.
-
References
Resources
- Photo Credit hipoteca americana image by caironbohemio from Fotolia.com
