
A mortgage agreement is a type of loan contract. This contract specifically ties the loan to the physical property.
Banks and real estate investors commonly engage in these agreements.
Mortgage agreements differ from rent-to-own contracts. Rent-to-own contracts allow occupancy before purchase, whereas mortgage agreements secure property purchase loans.
Similarly, mortgage agreements diverge from personal loans by using the property as collateral; personal loans do not.
Popular features of mortgage agreements include interest rates, loan term, and amortization schedule. Interest rates determine the cost of borrowing, loan term establishes the repayment period, examples being 15, 20, or 30 years, and the amortization schedule outlines the payment plan, including principal and interest breakdowns.
Common features of mortgage agreements encompass principal amount, collateral, and default consequences. The principal amount refers to the loan’s original size, properties serve as collateral to secure the loan, and default consequences include foreclosure, seizing the property from the borrower.
Unusual features of mortgage agreements might include balloon payments, adjustable-rate mortgages (ARM), and interest-only payments. Balloon payments require a large sum at the loan’s end, adjustable-rate mortgages have fluctuating interest rates, and interest-only payments involve paying only the interest for a specific term.
Unique to mortgage agreements are foreigner loan options, leasehold purchase financing, and developer financing. Foreigner loan options cater to non-Thai nationals, leasehold purchase financing applies to properties with expiring leases, and developer financing allows buyers to finance directly through the property developer.
Mortgage agreements stand distinct from other financing forms by their security through real property, specific features tailored to property purchase, and legal implications surrounding default. While similar financing vehicles might offer flexibility or less stringent requirements, none marry the legal security and feature specificity of mortgage agreements in the context of real estate acquisition.
For a comprehensive understanding of these terms, refer to our glossary about Bangkok real estate.