Mortgage is a key word used in the housing industry. Most of us know that it involves real estate debt that allows us to buy our own apartment. What should we know when deciding to buy a property through a mortgage?
What is a mortgage?
A mortgage is a right limited by property law, which is entitled to the mortgage creditor. It secures the claims that the property owner (mortgage debtor) holds against him.
The mortgage is imposed on the property, so the creditor can enforce the liability even if the owner of the property is someone else. If the debtor does not repay his debt, the creditor may take back the property and sell it. Thanks to this, he will recover money.
How is a mortgage created?
A mortgage is usually created as a contract that must be entered in the land and mortgage register in order for it to be valid. The contract should be written in the form:
- Written (if the bank or credit unions become the creditor)
- Notarial deed (if another natural or legal person is the creditor)
Establishing a mortgage – who is responsible for it?
The court is responsible for establishing the mortgage. When purchasing a property, a notarial deed is prepared and then an application for entry in the land and mortgage register is submitted. It is important to ensure that after repayment of the debt, the mortgage pledge over the property is deleted.
Types of mortgages
- Contractual – was established on the basis of a written contract and entry in the land and mortgage register
- Forced – came from the application of the person who has the verdict
- Joint-contractual – created on the basis of a written contract, on which a mortgage is created jointly on several properties
What’s in the mortgage application?
- Mortgage amount
- Type of mortgage
- Loan repayment time
- The interest rate on the loan
- Reason for which it is established
What happens to the mortgage after the property is sold?
The sale of a mortgaged property is not synonymous with the removal of the mortgage – it is still on the property. To sum up, the mortgage becomes a collateral in the event of default. It is established by the court and an entry in the land and mortgage register.
If the owner is unable to repay the loan, the mortgage creditor may apply for the enforcement of bailiffs, in which the property and mortgage will be sold. Hence – by becoming a new owner of a mortgaged apartment you will be obliged to pay off the mortgage.