Mortgage: what is it and how is it associated with a mortgage?
Have you ever heard the term ‘mortgage’ but you don’t know exactly what it means? Maybe you are planning to take out a mortgage, which is why you want to be aware of the importance of this commitment and its consequences? Take a look at our cheat sheet!
What is the definition of a mortgage?
A mortgage is a kind of warranty for obligations. What is the purpose of establishing a mortgage on real estate? Let’s try to explain it with an example of a mortgage. As the name suggests, in the case of a mortgage, there is a mortgage in the form of security for this liability.
Let’s assume that we took a mortgage for a house and therefore a mortgage for the bank was established. For what? Granting a mortgage is associated with a high risk for the bank, so the house is to provide security.
In practice, this means that if the mortgage is not properly regulated by us, the bank has the right to use the house to recover the amount due. It can therefore be said that the mortgage in this case protects the bank’s interests.
What does the mortgage have to do with buying an apartment?
If you intend to buy a flat or a house on the secondary market, you must take into account that the purchase of the property was credited with a mortgage and a mortgage was established for the bank. What are the consequences? If you unwittingly buy such a flat / house, you, as its owner, will have to repay the liability, otherwise the premises may be auctioned off. That is why it is necessary to check the land and mortgage register for the flat / house.
In the land and mortgage register, we should find information on whether the property we choose is encumbered with a mortgage, how much is the mortgage amount, etc. It should also be remembered that a mortgage does not necessarily have to be inextricably linked to a loan. Sometimes established for other reasons.
SUMMARY: we have already learned what a mortgage is and what consequences it can have for property owners. It is worth remembering, especially if we are planning to buy an apartment or house from the secondary market. However, it should be borne in mind that a mortgage solution does not always apply only to real estate.