ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In simple terms, a home loan is a loan taken to buy or construct a new home – i.e. the property is not owned by the loan applicant. A mortgage loan, also known as a loan against property, is a loan secured by a property that the loan applicant already owns.

Detailed explanation-2: -Mortgage refers to the process of offering something as a guarantee or collateral against a loan. One may come across the term when looking for secured loans. Generally, home loans of all types are secured loans. The borrower must offer their property as a security to the lender.

Detailed explanation-3: -A loan is the sum of money borrowed from a financial institution to meet various goals or requirements. It may be collateral-free or secured. Mortgage refers to an immovable property that is used as collateral to avail a loan.

Detailed explanation-4: -The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning “death pledge” and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure.

Detailed explanation-5: -The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being arc called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed. (b) Simple mortgage.