The modern mortgage has only been around since the 1930s, but the idea of a mortgage has been around for a lot longer.
First, it’s important to talk about the meaning of the word ‘mortgage’. To understand the word, we need to break it down into two separate Latin words: ‘mort’ and ‘gage’. ‘Mort’ means ‘death’ and ‘gage’ means ‘pledge’. A mortgage is a dead pledge.
Don’t let that scare you! The dead part of the mortgage doesn’t refer to you or any other person. Instead, it refers to the idea that the pledge died once the loan was repaid, and also the idea that the property was ‘dead’ (or forfeit) if the loan wasn’t repaid.
Mortgages are mentioned in English common law documents that take back as far as 1190. These documents illustrate the beginnings of a basic mortgage system. They describe how a creditor is protected in property purchase agreements. Specifically, a mortgage was a conditional sale where the creditor held the title to the property while the debtor could sell that property in order to recover the money paid.
Essentially, a mortgage is a loan secured by a property. Most people don’t have the liquid capital required to purchase a house entirely on its own and mortgages help these people purchase homes and properties.
This article is an abbreviated version of “History of The 30 Year Mortgage – From Historic Rates To Present Time” from www.bebusinessed.com/history/history-of-mortgages/.