In a mortgage transaction, the borrower pledges his property to the lender as security against the mortgage loan. In both, traditional and commercial mortgage loan transactions, the real estate is used as collateral to secure repayment. Several countries including Spain, United Kingdom, and the Commonwealth of Australia have special laws which allow home purchase transactions to be funded by mortgage loans.

Mortgage refinancing

Mortgage refinancing offers many an option to borrowers to combine mortgages, increase their duration etc. With the aid of mortgage refinancing; a person can channel two or three mortgages in a single mortgage and can increase the duration of repayment. In case he has extra cash, he can shorten the duration of loan repayment. Several debts can be consolidated onto a single path with the aid of mortgage refinancing. Mortgage refinancing offers the borrowers with plenty of convenient. However, such transactions can be saddled with undesirable hidden costs. Most lending agencies charge a penalty on pre-payment i.e. early payment of mortgages.

Flexible mortgages

Flexible mortgages give borrowers the liberty to alter their monthly payment rates according to their changing circumstances without the liability of a penalty. Under flexible mortgage transactions one can make regular payments, occasional overpayments, holiday payments and underpayments. Previously, heavy rates of interest were charged on flexible mortgages. Today, the picture has changed drastically. A person can save hundreds of pounds or dollars in case he enjoys an extra cash flow and wishes to make overpayments. If the cash on hand is tight, then one can enjoy the liberty of underpayment under flexible mortgages.