What is mortgage and how can we utilize it in business life? These queries will be discussed here in detail. As often some students or general public get confused due to various type or features of mortgagee. Mortgage is a debt instrument where the collateral is in the form of property. Mortgages are usually related to home ownership. This loan can help someone to buy a house even if they do not have enough money. To get to know what a mortgage is, here’s a full description.
What is a Mortgage?
What is Mortgage? Mortgage is also known as a debt instrument that is done by giving mortgage rights from the borrower to the lender as collateral for debt payment obligations. In a mortgage, the borrower can still use or utilize the property. Later, if the debt or obligation has been paid in full then the dependents on the property will be canceled.
Mortgage to buy property
Mortgages are usually used by someone or business people to buy property when they don’t have enough money. The purchase value of the property does not need to be paid in full. In return, the borrower must pay off the debt for a certain period which is usually years plus interest on the loan. If the debt is paid off, then the borrower will be free and the property can be taken back entirely.
Mortgage as a claim on property
Because a mortgage is also included as a right or claim on property, when borrowing money, the borrower will use the property as collateral. That is, if the borrower fails to repay his debt or stop paying the mortgage, the lender may confiscate the property which is used as collateral
Mortgage Objects?
- Here are some objects of mortgages, including:
- A movable object and all its accessories can be transferred through it
- The right to use an object and all its accessories
- The right to exercise business rights
A market recognized by the government along with the original rights attached to it
Nature of Mortgages
Mortgages have several properties. Here are some of the properties or features of mortgages:
Absolute nature: This means that in a mortgage there are rights that can be defended against anyone’s demands.
The nature of droit de suite or zaaksgevolg. This means that there is a right that always follows a set route in the hands of any party where the object is located.
The nature of droit de preference. This means that a party has the right to be prioritized for the fulfillment of its receivables among other debtors.
Typical Mortgage
Mortgages also have several characteristics. Here are some of the characteristics of a mortgage:
1. Accecoir
The point is that the mortgage is an additional agreement that is dependent on the principal agreement on the debt and receivables.
2. Ondeelbar
The point is that the mortgage cannot be divided. This is because the mortgage is executed for all objects that come under the mortgage. Although some debt has been paid, but some mortgage rights cannot be written off.
3. Verhallsrecht
The point is that in a mortgage there is only the right to repay debt. In a mortgage there is no right to own objects in it. However, the creditor can sell the object as collateral for his own power if it is regulated in the agreement.
Principle in Mortgages
The principles of a mortgage are important and must be considered in making a mortgage. These principles include:
1. Publicite Principle
In this principle, the mortgage must be registered in the general register. That is, there must be a third party who knows about this mortgage. Whereas the official deed of the mortgage must be registered with the Land Registration Section.
2. Principle of Specialism
In this principle it means that a mortgage can only be made for certain objects. The objects in question are to be bound as dependents. For example, objects that have a form, clearly located, and also clearly large and its boundaries.
3. The Ondeelbaarheid Principle
In this principle it means that a mortgage cannot be divided. The point is the mortgage burdens all objects mortgaged. Even though the debt has been partially paid, it still cannot reduce mortgage dependencies.
