The term mortgage is used almost exclusively in connection with real estate financing. However, the mortgage has been increasingly replaced for years by a mortgage. The mortgage is a so-called land charge, which the owner or beneficiary of the mortgage has on a specific property or even a property. By means of the mortgage, a lender has the opportunity to enforce his rights to the property under certain conditions and even have a compulsory auction carried out on the property.
Owner of the mortgage is the owner of the property
Legally, the owner of a mortgage is the owner of a property. In practice, the practice is usually to provide the bank with a real estate loan to its customers to finance a home purchase or construction of the property. In return, the mortgage is entered in the land register in favor of the lending bank. Should the borrower fail to meet his obligations properly, ie not pay the loan installments as agreed, the bank can assert its ownership and sell the asset. The sales proceeds can be used to settle the outstanding liabilities of the former owner and borrower.
Book and letter mortgage as two variants
It is true that the mortgage has lost considerable importance within the last ten years, because banks almost only use the more extensive land charge as collateral. Nevertheless, mortgages are still widely used in some countries, for example in Austria. A distinction is made between a so-called letter and a book mortgage. With the book mortgage it is so that the valid right is justified by the fact that the mortgage is registered in the land register. Although this is also the case with the letter mortgage, a mortgage letter is also issued. If you hold this letter in your hands, you are the beneficiary of the mortgage, so that a transfer can be made somewhat easier than a pure book mortgage.