Many people think that a “mortgage” is a loan of money to buy their house.

This is the problem with presumptions.

Terminology is everything.

A “Hoover” is a tradename for a vacuum cleaner, therefore not all vacuum cleaners are “Hoovers”.

What is a Loan?

A “Loan” is normally one of 2 things.

1) Something you do or supply for free, normally to a friend who will return the thing,money or the favour.

2)The other is a commercial activity where the “Loan” has conditions attached, normally a contract and where you pay a commercial rate for the provision of a “Loan”

 

A Loan could be described as the particular loss of an asset for a period of time until it is returned, with or without any commercial rates attached.

For a Loan to have taken place therefore:

The amount “Loaned” MUST cause a deficit in the accounting of the “LENDER”

If this simple transaction does not occur it therefore cannot be classified as a “LOAN”