When it comes to mortgages, you’ve probably come across the term Mortgage Lien Certificates, which make it easier for banks to finance mortgage loans.
What is a Mortgage Bond?
We refer to mortgage bonds by the abbreviation HZL and they are bonds issued by mortgage banks to raise funds for mortgage lending. Their nominal value, including interest, is covered by the mortgage loan receivables secured by the mortgage.
What is a Mortgage Bond for?
Mortgage Bond are usually issued for 5 years, but can be longer. The holder can sell them back to the bank or through an authorised person on the stock exchange before maturity. They are not subject to income tax and are one of the least risky investment instruments. The yield on HZLs is virtually guaranteed in advance.