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Mortgages: Getting to Know the Basics #PropertyInsights


A mortgage is a financial scheme provided by financial institutions such as banks to potential buyers looking to purchase a home or property. The loan given is a lump sum of money which is paid back with interest over a period of time. This involves the transfer of some interest in land or property to the institution as security for the payment of the said loan.

A mortgage agreement ends when the payment obligation is fulfilled or if the property is taken by the mortgagee through foreclosure. The interest transfer may become absolute in the event that the mortgagor (client) is completely unable to make the payments to the mortgagee (bank). Foreclosure allows the mortgagee to declare that the entire mortgage debt is due immediately, failure to which leads to repossession or sale by the financier to clear the debt.

Before signing a mortgage agreement, it is important for you to understand the options that you have and their features, enabling you to make an informed decision. The two main types of mortgages offered are:

• Fixed Mortgages –The interest rate remains constant throughout the life of the loan, as agreed upon between the two parties.
• Variable Mortgages – The interest rate is initially fixed for a certain period of time, after which it begins to change in relation to the prevailing market rates.

Get more property insights from Pam Golding.


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