A mortgage is not the same as a mortgage loan. In fact, we often talk about mortgages when we should be talking about mortgage loans.
What is a mortgage loan?
A mortgage loan is a contract through which a bank lends an amount of money to a company or individual to buy a property in exchange for interest over a defined period.
In other words, a mortgage loan is an amount of money a bank lends to us so we can buy a home. This mortgage loan is a guaranteed obligation, which means the guarantee for repayment of the loan in the event of default is the property itself.
What is a mortgage?
A mortgage is an in rem guarantee right. In a mortgage loan, the mortgage is the guarantee that the loan will be repaid.
To put it simply, the main difference between a mortgage loan and a mortgage is that a mortgage is what guarantees the repayment of a mortgage loan.
What happens if I want to sell my house when it is mortgaged?
The mortgage must be registered with the Land Registry and remains attached to the property. There are two possible cases if we want to sell the property:
1. The mortgage has been repaid, in which case we have to remove the mortgage from the Land Registry so that we can sell the property.
2. The mortgage loan is still being repaid. We have three options in this case:
- Sell the house and pay off the mortgage.
- Subrogate the mortgage to the buyer.
- Apply for a bridging mortgage loan.