Borrower , with etymological origin in praestatus (of the Latin language), is the adjective that applies to the person who receive money borrowed . The borrower, therefore, is the one who requests a loan and access an amount with the requirement that you return it under certain conditions.
It can be indicated, in this way, that a loan (also called credit ) is a financial operation that links two parties: the borrower (who asks for and receives the borrowed money) and the lender (who contributes the money: it is usually a Bank or other type of financial institution).
Usually, the borrower approaches the lender with a loan application. The lender, after analyzing the solvency of the person (to know what the risk of default is), you will be granted a certain amount of money as a loan under certain conditions: an interest rate, a term to pay back what you borrowed, etc. Upon the expiration of the agreed term, if both parties respect the conditions, the lender will receive an amount of money greater than what was delivered to the borrower and that difference will be constituted as his profit for the operation.
A borrower can also be a user or client who receives a certain service . A company that distributes electricity, to cite a possibility, is the provider of a service whose borrowers are all those who can make use of electricity in their homes. As in the case of money loans, the link between lender and borrower is usually subject to a contract or to certain conditions established by law.
The borrower and the mortgage
One of the most common types of loans is the mortgage, which is a product offered by the banks to have a certain amount of money, which must be repaid along with the percentage of interest that corresponds in a quantity of periodic payments that are set at the time of contracting the obligation. The name "mortgage" refers to the fact that in this case a mortgage about a customer property (usually a home).
Upon receiving a mortgage loan, the borrower agrees to comply with the obligation just mentioned, knowing that you can lose the property that has been set as collateral. In addition to the figure of the lender, which is usually a bank but can also be a person or other entity, is the guarantor , which is the person who gives the lender the assurance that the money will be returned in the term and the form that has been agreed with the borrower.
Depending on the case and the possibilities of the borrower, there may be one or more guarantors per mortgage loan contract. When they are more than one, they can be solidarity (if each one agrees to face the total of the debt ) or joint (If each one is responsible for covering a part of the loan).
It's important pointing that only when the lender has resolved that the borrower is insolvent , that is to say that it cannot take charge of its debt with the first one, it can be directed against the guarantee to demand that it fulfill its obligation. When there are several guarantors, in theory, you can only ask each of them for the proportional amount of the loan; on the other hand, the practice shows a different reality, since it is normal for the guarantors to give up said benefit , so that the lender can sue any of them the total amount owed without even proving the insolvency of the borrower.
It is not surprising that so many people end up losing everything after having embarked on a mortgage loan that ruins them financially. In fact, cases of suicide are common in the face of the despair of staying in the street and with an unpayable debt.