Mortgage Agreement Documents
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A mortgage agreement is a contract between the mortgagor (borrower) and mortgagee (lender), which provides for a legal obligation on the part of the borrower to repay an amount of money should he fail to do so. The mortgagee agrees to advance funds to help finance the purchase of property or commercial investment property, if certain conditions are met including that these obligations will be secured by the title to real estate, typically through a registered mortgage.
The Mortgagor vs. The Lender
The mortgagor, also known as the borrower, borrows money through a lender. The borrower agrees to repay this borrowed amount together with interest over an agreed period of time at settled intervals or some other date specified in the contract.
The lender, on the other hand, guarantees that regardless of what might happen to the borrower’s property during this period of time, even if it isn’t worth anything anymore because it has been foreclosed on or something happens to damages it following a foreclosure or some sort of catastrophic event that would have made the property less valuable – regardless of any change in status with respect to their home — they still owe X number of dollars. That’s how these types of transactions work.
Structure Of A Mortgage Contract
Description of the type of the property involved
Location of the property being mortgaged
Detail the banking information of the lender and the borrower, guarantor
Provide details about the loan and financing terms based on risk involved
Define the payment terms (weekly/monthly)
Additional clauses pertaining to sales, repayments, penalties, etc.
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What is a mortgage contract?
Mortgages are agreements in which you borrow money from a financial lender for the purchase, construction, or renovation of a property. In Canada, the mortgage agreement protects both borrowers and lenders in order to ensure protection against any unforeseen circumstances. Mortgage contracts are used when making a large purchase like a house.
What's the difference between a long-term mortgage and a short-term mortgage?
A short-term mortgage is usually for a term of fewer than 3 years and has a lower interest rate. Short-term mortgages and sought after for people who plan to move or pay for the home early. Long-term mortgages are for longer periods of time and usually have higher interest rates that are guaranteed for a longer period of time.