Law

What is a Mortgage and what do You Need to Know about It?

12/19/2018 Rajesh singh 0 Comments


 In this text we at Mitch Engel brampton will answer all the questions related to mortgage and explain everything you need to know about it.

What is a mortgage?

Mortgage is a lien on immovable property that authorizes a bank (creditor) to collect its claims by selling real estate, in case the debtor does not pay the debt. When buying an apartment on a mortgage loan, it is a guarantee to the bank that it will not be at a loss if the buyer of the apartment can not repay the loan. The real estate over which the mortgage is established remains the property of the buyer, so he can dispose of that property. So, when you buy an apartment and establish a mortgage, you can live in that apartment, rent it, and even sell it.

How to buy an apartment that is mortgaged?

Most buyers hear that a mortgaged apartment is quickly abandoned. But there are several ways to securely buy a mortgage apartment.

The seller may erase the mortgage until the date of conclusion of the contract. This can be done by paying off all remaining loan rates and thus settling the debt to the bank. Often it happens that the seller is paying out a mortgage from the buyer.
Money is given when closing a pre-sale contract. When a seller removes a mortgage from a real estate cadastre, he submits to the buyer a list of immovable property without any burden and registration. In addition, the seller must also submit a decision on the removal of the mortgage, issued by the competent cadastre of the real estate.

The second option is that the buyer pays the price of the property directly to the bank. In this case, the seller of a bank asks for a letter of intent in which the bank undertakes to wipe off the mortgage after settlement of the entire debt. In addition to the letter of intent, the seller must also request confirmation of the state of the debt. After verification of the contract on the sale of real estate, the buyer will, following the instructions of the bank, pay a part of the contracted price of the property to the bank account of the seller. After this payment, the seller is obliged to obtain all the necessary documentation as in the previous case.

The third option is the most unfavorable for the buyer and accordingly, we do not recommend it, but in practice it is possible to buy a mortgage apartment like this. The buyer can pay the agreed price directly to the account of the seller, and the seller will pay the money to the bank with this money. After that, the procedure around the documentation is the same.

 This option is not favorable to the buyer because it can happen that the seller does not fulfill his promise and the customer ends with a real estate that is still burdened with a mortgage. The first two options are certainly safer and better.
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