The term mortgage loan generally includes all those loans that are secured under land register law. In banking, a loan can be secured by real estate using a mortgage, which is one of the mortgages. However, not only is the land lien commonly referred to as a loan, but also the mortgage associated with it. Accordingly, a mortgage primarily serves as a means of securing a loan or a loan and is usually justified by ownership of a property, a property or the ground lease. It should be noted that the lender has the right to request payment of a contractually stipulated amount of money from the property, even if this results in the foreclosure of the property.
Basically, mortgage loans are one of the cheapest forms of loan procurement, since their security is guaranteed by pledging a corresponding property. With a mortgage lending value of up to 60 percent, you usually get a very low interest rate, since with higher mortgages the risk for the lender increases, an interest surcharge is charged for mortgages over 60 percent.
It should also be noted that a mortgage loan is usually a long-term contract and that termination can usually only be carried out at very high costs. It is therefore advisable to take out prepayment protection, which enables, for example, a free change of debtor, a pledge or the transfer of the mortgage loan.
For the lender, a mortgage loan offers a particularly high level of security, because he has the right to pledge the mortgaged property in the event of non-compliance with the agreed repayment modalities, to sell it if necessary and to withdraw the outstanding amount from the proceeds. The borrower, on the other hand, benefits from more favorable interest rates due to his increased creditworthiness, which is based on ensuring repayment by pledging the property in question.
For the lender, the main disadvantage is the lower interest income, while the borrower bears the risk of registering the lien of his property as well as the additional costs incurred for the notary and the entry in the land register.