What is a Closed-End Mortgage?
Closed-end guarantees, also known as limit mortgages, refer to the property that has provided guarantees that can no longer be used as collateral for bonds issued in the future, that is, the same property cannot be used as security for bonds issued in the future.
Closed guarantee
Right!
- Chinese name
- Closed guarantee
- Also known as
- Limit mortgage
- Definition
- Means that the guarantee has not been used
- Part of speech
- noun
- Closed-end guarantees, also known as limit mortgages, refer to the property that has provided guarantees that can no longer be used as collateral for bonds issued in the future, that is, the same property cannot be used as security for bonds issued in the future.
- Contents of closed guarantees
- Closed guarantee means that the company cannot issue bonds with the order of claims equal to the current bonds and use the same collateral. However, it is allowed to issue bonds with the same order of claims with lower claims. In this way, the first issued bond is called the first mortgage bond Or senior mortgage bonds, bonds of the second wholesale bank are called second mortgage bonds or lower mortgage bonds. When the issuing company fails to perform its bond obligations, the holders of the second mortgage bond must wait to pay off all the debts of the holders of the first mortgage bond with the sale price of the forfeited collateral, and then if the remaining balance is available, the principal and interest can be paid. Therefore, the risk of the second mortgage bond is greater than that of the first mortgage bond, and the interest rate of the second mortgage bond is greater than that of the first mortgage bond. The higher interest rate is used to compensate for the risk. [1]