A mortgage or mortgage loan is a contractlong-term through which a person, natural or legal, lends a certain amount of money to another person, the debtor, for the purchase of a home. With this, in the event of a non-payment by the debtor, the creditor is entitled to claim the property to offset the debt. Generally, mortgages are associated with real estate (such as homes or industrial buildings) for the acquisition of which a loan is requested from a bank.
When we talk about mortgage, we have to identify the three most important components of a mortgage contract:
- Capital: is the amount of money that the bank lends to the person requesting the loan and that, therefore, must be returned little by little until the full payment of the debt is achieved.
- Term: it is the agreed period of time during which the payment of the debt must be completed and also the monthly payments that the debtor has to face.
- Interest rate: is the percentage of cost that the debtor has to overpay the creditor for the loan. Interest rates can be fixed or variable, they can be reviewed periodically and they can modify the amount to be paid.