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Definition of a mortgage

loans

A loan is a contract signed between two parties, whereby the borrower is allowed to obtain money from the second party, the lender, in return for paying interest in the form of an amount of money in addition to the original loan amount, and the borrower must return the full amount to the lender at the end of the contract term plus the value of the interest The interest rate may be variable or fixed, and the contract between the two parties includes the maturity date of the loan and interest as a percentage of the amount obtained by the borrower, and also includes the size and dates of payments made to the lender, and there are several types of loans, including real estate loans, consumer, commercial, industrial and construction loans, and loans provide liquidity. For businesses and individuals, they are therefore a necessary part of the financial system.

Definition of a mortgage

The mortgage loan is one of the most important tools used to obtain real estate property without having to pay the full amount, and the borrower is obligated to pay the full amount through a set of specified value payments, and real estate loans are used by individuals and companies to make real estate purchases, and the borrower pays the value of the loan in addition to the specified interest In the contract, it is known about the mortgage loan that in the event the borrower does not pay the agreed installments, the lender has the right to obtain the property in exchange for the money paid.
Definition of a mortgage
Definition of a mortgage

Conditions for obtaining loans

Loans are among the basics that companies and individuals need, in order to provide the necessary liquidity to purchase an asset, pay off debt, or purchase goods. There are a set of conditions that must be followed to obtain a loan, which are as follows:
In the beginning, the bank must ensure the borrower’s credit ability, and accordingly the bank conducts a complete credit analysis and a detailed review of the borrower’s financial statements, whether individuals, companies or institutions, in order to assess his financial ability to repay.
The next step is to ensure that the bank has the main source that the borrower relies on to pay, and that this source covers the value of the amount obtained by the borrower.
Complete research on all short-term assets owned by the borrower, such as stocks, bonds, and residential buildings as an alternative source of payment, which can be converted into cash if necessary, or in the event that the borrower defaults on payment.

Types of loans

Bank loans are divided into two main sections, namely short-term loans, and the other long-term loans, and the concept of each of them can be explained in detail as follows:

short term loans

Short-term loans are used to finance the purchase of assets in small companies, which are machines and equipment that last between one to three years, such as computers. Pay bonuses, dividends and optional payments only after the loan installments are paid.

long term loans

Banks provide long-term loans to large companies, at a rate of 65% to 80% of the value of the assets owned by the company, and they are usually specialized in buying real estate, as in the case of a real estate loan, or buying a commercial facility or major equipment, and in the case of long-term loans it is considered Asset is the principal guarantor of the loan.
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