Normally the guaranteed obligation consists of having to give back a granted credit, or a given loan, plus the accessory responsibilities derived from the possession, that they are delimited using three fundamental parameters:

• The capital (or main), that is the sum of money given by the indebted creditor to the mortgating one. The post of the debited capital usually is smaller than the value of accomplishment of mortgaged property, so that this one can respond of the capital reaching an effective solution in a public auction, in case one has to take place if there is a non-payment, or starts off, of the credit or the debited loan.

• The term, that is the time that will take the return from the capital and its accessories. The return of the loan is realised by means of periodic payments (generally monthly), until giving back the capital asked for plus all the accumulated interests during the agreed time to give back the main one.

• The type of interest, that indicates an annual percentage that it is due to pay to the mortgagee (bank, savings bank, financial society, or individual) for gains of the capital.

The type of interest can be as well:

• Fixed: It maintains his value throughout all the term of the loan.
• Variable: Its S-value is reviewed periodically with the aim to adapt its value to the present state of the economy. Some economic index like the euribor, Libor or the IRPH is used generally, to which a differential is added to him so that the interest of the mortgage always is superior to the reference index.

Once known the 3 parameters previous it is possible to realise the calculations to know as they will be the gains of the bank by the concession of the loan and what will be the quota that we must pay monthly until amortizing it (return of the money to the bank).

The mortgage, like real right of value assurance, allows the mortgagee to put mortgaged property under unavoidable sale, normally by means of judicial auction, with the purpose of making a payment to the debt withwhich the product was obtained from or realised.

Mortage credits or mortgage loans are normally made by a bank or a financial institution to a person or company, the interest rates of a mortgage loan can vary from bank or institution and are normally subject to the interest rates published by the government.

Mortgage loans are considered long term credits, this means that a mortgage can be repayed making monthly payments over the course of many years (10, 15 or even 30 years) and is the main method of purchasing real estate property in the United States.

The mortgage is a form of very effective guarantee and for that reason mainly it is used by the financial organizations of credit (banks and savings banks), in mortgage loans, and whose confidence has caused a well-known development of the credit territorial and favored therefore the creation of the so called real estate bubble. The recent global financial crisis, initiated in the second half of 2007, has dragged after itself, although to a lesser extent, an important real estate crisis, and overall the distrust of the citizens of some countries in the banking organizations. In the photo many clients in front of the offices of the Northern Rock making line to retire its savings, in 2008, after a big wave of today already unwarranted panic, since this bank has been acquired by the British public sector.

A mortgage loan is a loan secured by real property through the use of a document which evidences the existence of the loan and the encumbranceof that realty through the granting of a mortgae which secures the loan. However, the word mortgage alone, in everyday usage, is most often used to mean mortgae loan.

A home buyer or builder can obtain financing (a loan) either to purchase or secure against the property from a financial institution, such as a bank, 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.

In many countries, though not all (Iran and Bali, Indonesia are two exceptions^[1]), it is normal for home purchases to be funded by a mortgae loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownershipis highest, strong domestic markets have developed.

Basic concepts and legal regulation

According to Anglo-American property law, a mortgae occurs when an owner (usually of a fee simple interest in realty) pledges his interest (right to the property) as security or collateral for a loan. Therefore, a mortgage is an encumbrance (limitation) on the right to the property just as an easementwould be, but because most mortgaes occur as a condition for new loan money, the word mortgage has become the generic term for a loan secured by such real property.^{[clarification needed]}

As with other types of loans, mortgaes have an interest rate and are scheduled to amortize over a set period of time, typically 30 years. All types of real property can, and usually are, secured with a mortgage and bear an interest rate that is supposed to reflect the lender’s risk.

Mortgage lending is the primary mechanism used in many countries to finance private ownership of residential and commercial property (see commercial mortgaes). Although the terminology and precise forms will differ from country to country, the basic components tend to be similar:

• Property: the physical residence being financed. The exact form of ownership will vary from country to country, and may restrict the types of lending that are possible.
• Mortgage: the security interest of lender in the property, which may entail restrictions on the use or disposal of the property. Restrictions may include requirements to purchasehome insurance and mortgae insurance) or pay off outstanding debt before selling the property.
• Borrower: the person borrowing who either has or is creating an ownership interest in the property.
• Lender: any lender, but usually a bank or other financial institution. Lenders may also be investors who own an interest in the mortgage through a mortgage-backed security. In such a situation, the initial lender is known as the mortgage originator, which then packages and sells the loan to investors. The payments from the borrower are thereafter collected by a loan servicer.^[2]
• Principal: the original size of the loan, which may or may not include certain other costs; as any principal is repaid, the principal will go down in size.
• Interest: a financial charge for use of the lender’s money.
• Foreclosure or repossession: the possibility that the lender has to foreclose, repossess or seize the property under certain circumstances is essential to a mortgae loan; without this aspect, the loan is arguably no different from any other type of loan.

Many other specific characteristics are common to many markets, but the above are the essential features. Governments usually regulate many aspects of mortgage lending, either directly (through legal requirements, for example) or indirectly (through regulation of the participants or the financial markets, such as the banking industry), and often through state intervention (direct lending by the government, by state-owned banks, or sponsorship of various entities). Other aspects that define a specific mortgage market may be regional, historical, or driven by specific characteristics of the legal or financial system.

Mortgae loans are generally structured as long-term loans, the periodic payments for which are similar to an annuity and calculated according to the time value of money formulae. The most basic arrangement would require a fixed monthly payment over a period of ten to thirty years, depending on local conditions. Over this period the principal component of the loan (the original loan) would be slowly paid down through amortization. In practice, many variants are possible and common worldwide and within each country.

Lenders provide funds against property to earn interest income, and generally borrow these funds themselves (for example, by taking deposits or issuing bonds). The price at which the lenders borrow money therefore affects the cost of borrowing. Lenders may also, in many countries, sell the mortgage loan to other parties who are interested in receiving the stream of cash payments from the borrower, often in the form of a security (by means of a securitization). In the United States, the largest firms securitizing loans are Fannie Maeand Freddie Mac, which are government sponsored enterprises.

Mortgage lending will also take into account the (perceived) riskiness of the mortgage loan, that is, the likelihood that the funds will be repaid (usually considered a function of the creditworthiness of the borrower); that if they are not repaid, the lender will be able to foreclose and recoup some or all of its original capital; and the financial, interest rate risk and time delays that may be involved in certain circumstances.