Demand option

A demand option is a provision included in a mortgage agreement. Under such a stipulation, the mortgagee may ask for a complete repayment of the loan after a certain period of time. The time period is likewise indicated in the agreement.

A mortgage loan agreement is a contract in which payment terms and all pertinent information regarding a mortgage loan are included. One of the main items in such a contract is the schedule of payment for the loan. Should the borrower be unable to fulfill his payment obligations in a timely manner, he may be considered delinquent. Should the delinquency continue, it is possible for the lender to demand foreclosure of the property.

Since the borrower’s right to the property serves as collateral for the loan, the borrower stands to lose the property in such an event. This becomes particularly complicated for the borrower if the property also happens to be his place of residence. It is therefore important for the borrower to follow the repayment schedule, as well as take note of the other conditions in the agreement.

Since a mortgage is a long-term loan, it is especially important for a borrower to consider his options for the next decade or so before entering into such an arrangement. Payments may be made in amortizations from a period of 10-40 years. As with other types of loans, mortgages carry interest rates. The amount of interest may be dependent on the creditworthiness of the borrower; an entity with a high credit score can be granted more flexible payment options with lower interest rates, while one with a low credit score may be burdened with more restrictions and higher interest.

The basic conditions included in a mortgage loan agreement should be in keeping with the regulations set forth by the state or territory in which it is to be executed.