The mortgage
Mortgage loans are the most traditional loans of all kinds. These loans are given to a borrower by a lender by taking a piece of land of the borrower as a security. The loan has its origin in France in 17th century. At that time there was no currency for loan repayment and usually the crops or the livestock of the land were used for loan repayment. Later such loans became independent of the crops in it. Whether there are crops or not the borrower has to repay the loans.
There was a drastic change in all these procedures when the people started to use currency. The loan could be repaid using currency. But then the next problem was that the lender had all the rights over the property and sometimes even sold it without the approval of the actual owner or sometimes refused to write it back to the borrower. By then Equity courts came into being to protect the ownership of the borrower over the land. Equity of redemption is the law that provided these rights to the borrower. Even after this, problems continued regarding the ownership and the rule was amended stating that borrower would be actual owner of the property but the lender would have the right to sell it if the borrower is not willing to pay the money back. Lien state is the term used in US for every state in which these laws are followed. The Property Act of 1925 is the similar law in UK, which was passed in court of Wales and England.
There are certain terms, which should be familiar to a person who would like to take these loans. They are advance which is a term used for the total loan amount together with the fees to be paid. Base rate is another term used differently in UK and US. In UK it is the interest rate approved by the Bank of England, where as in US it is the discount rate approved by the Federal Reserve.
