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Ask a stupid question.

First you have to understand I am not an accountant so what may seem obvious to you could be rocket science to me. 

Here goes. When a bank gives you a mortgage on say 50% of your property value does that mean they have effectively placed a charge on your house and can list 50% value on their balance sheet as an asset?

There is a reason for me asking this question but if I told you I would then have to shoot you.

Would appreciate some help on this as it would be useful information at the moment.

Thank you.

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07th Apr 2011 06:46

No

The asset is the mortgage they have advanced to you. The charge simply means it's more likely to be repaid.

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07th Apr 2011 09:00

i could give you an answer ...

.. but then I'd have to shoot you! Its a good job peter has taken the trouble to answer the question, and saved me the bother of shooting you.

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07th Apr 2011 09:17

But does that mean...

you have to shoot Peter?

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07th Apr 2011 09:25

...hmmmmn

interesting dilemma ...

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07th Apr 2011 10:05

To be pedantic

It is the home owner who gives the mortgage (the pledge of title to the property) to the bank.  What the bank gives the home owner is a loan.

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By plummy1
07th Apr 2011 22:31

Thank you

Thanks for all your answers.  Nobody got shot and if you dont mind me saying Euan your a fine looking woman.

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07th Apr 2011 22:39

The bank's asset

Statement of the obvious, but what the bank can (and does) list as an asset is the outstanding balance of the debt due to them from their customer.

The bank will include this on its Balance Sheet as a debtor.  (In accountant speak there is a debit balance on the customer's account in the bank's records when the customer owes money to the bank.)

David

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By plummy1
14th Apr 2011 21:55

Thank you

Thanks David that was put in a way that made total sense to me.

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