Question

Neehara recently opened a premium bakery. she did not have enough savings and hence she applied for a loan to obtain the additional funds required to start the bakery. she had to provide her house as collateral to obtain the loan. the type of financing obtained by neehara can be regarded as a _____. mortgage trade credit mutual fund non-recourse loan dividend

Answer 1

This type of financing is called a mortgage loan. This is widely used in real estate business. The buyer acquires the real estate property, say a house. Without paying the full price of the house, you can apply for a loan, usually with banks. In return, you are going to allocate monthly payments to pay off the principal amount that you borrowed plus the interest of your loan until all debt pays off. Until the debt is not yet cleared, your property is declared as collateral.