Mortgage loan requires the borrower to provide a certain amount of collateral as the guarantee of the loan to ensure the repayment of the loan at maturity.
Collateral is generally easy to preserve, not easy to wear and tear, and easy to sell, such as securities, bills, stocks, real estate, etc.
After the loan expires, if the borrower fails to repay the loan on time, the other party has the right to auction the collateral and repay the loan with the proceeds from the auction.
The balance of the auction money after paying off the loan shall be returned to the borrower.
If the auction money is not enough to pay off the loan, the borrower will continue to pay off.
Article 394 of the Civil Code of People's Republic of China (PRC) guarantees the performance of debts. If the debtor or a third party mortgages the property to the creditor without transferring the possession of the property, the debtor fails to perform the due debt or the creditor has the right to receive priority compensation for the property.
The debtor or the third party specified in the preceding paragraph is the mortgagor, the creditor is the mortgagee, and the property that provides guarantee is the mortgaged property.
Article 395 The following property that the debtor or a third party has the right to dispose of may be mortgaged:
(a) buildings and other land attachments;
(2) The right to use construction land;
(3) the right to use the sea area;
(4) Production equipment, raw materials, semi-finished products and products;
(5) Buildings, ships and aircraft under construction;
(6) means of transportation;
(seven) other property not prohibited by laws and administrative regulations.
The mortgagor may mortgage the property listed in the preceding paragraph together.
Article 399 The following property shall not be mortgaged:
(1) Land ownership;
(two) the right to use collectively owned land such as homestead, private plots and private hills, except those that can be mortgaged according to law;
(3) Educational facilities, medical and health facilities and other public welfare facilities of non-profit legal persons established for the purpose of public welfare, such as schools, kindergartens and medical institutions;
(4) Property whose ownership and use right are unknown or controversial;
(5) Property that has been sealed up, detained or supervised according to law;
(6) Other properties that may not be mortgaged according to laws and administrative regulations.