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Simple English definitions for legal terms
standing mortgage
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A quick definition of standing mortgage:
A standing mortgage is a type of loan where the borrower only pays the interest for a certain period of time, usually a few years, and then must pay the full amount of the loan in one lump sum. It is also known as an interest-only mortgage. Mortgages are loans that are secured by property, meaning that if the borrower fails to pay back the loan, the lender can take possession of the property. There are many different types of mortgages, including adjustable-rate mortgages, fixed-rate mortgages, and balloon-payment mortgages.A more thorough explanation:
A standing mortgage is a type of interest-only mortgage where the borrower is only required to pay the interest on the loan for a certain period of time, usually a few years. At the end of the term, the borrower must pay the entire principal amount in one lump sum payment. This type of mortgage is also known as a straight-term mortgage.
For example, let's say a borrower takes out a standing mortgage for $200,000 with a term of five years. During those five years, the borrower only has to make monthly payments on the interest, which is based on the outstanding balance of the loan. At the end of the five years, the borrower must pay the entire $200,000 in one payment.
Standing mortgages can be risky for borrowers because they require a large sum of money at the end of the term. However, they can be useful for those who expect to have a large sum of money available at the end of the term, such as from an inheritance or the sale of another property.