Mortgage Lenders
Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society,
depending on the country concerned, and the loan arrangements can be
made either directly or indirectly through intermediaries. Features of
mortgage loans such as the size of the loan, maturity of the loan,
interest rate, method of paying off the loan, and other characteristics
can vary considerably. The lender's rights over the secured property
take priority over the borrower's other creditors which means that if the borrower becomes bankrupt or insolvent,
the other creditors will only be repaid the debts owed to them from a
sale of the secured property if the mortgage lender is repaid in full
first.
In many jurisdictions, it is normal for home purchases to be funded
by a mortgage loan. Few individuals have enough savings or liquid funds
to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. An alternative to mortgages that meets the requirements of Sharia (Islamic law), is the Islamic mortgage.
Sharia prohibits interest, so Islamic mortgages are structured to avoid
it by using other strategies such as markup of the purchase price.
