Mortgage

A mortgage is a type of loan specifically used to purchase real estate, typically a home or property. In a mortgage agreement, the borrower receives a sum of money from a lender, usually a financial institution, to buy the property. In return, the borrower agrees to repay the loan amount along with interest over a specified period, which can range from a few years to several decades.

The property purchased serves as collateral for the loan, meaning that if the borrower fails to make the required payments (a situation known as default), the lender has the legal right to take possession of the property through a process called foreclosure. Mortgages can vary in terms, including fixed-rate mortgages, where the interest rate remains constant throughout the loan’s duration, or adjustable-rate mortgages, where the interest rate may change at specified intervals.

Mortgages are essential tools for many individuals and families, enabling them to buy homes without paying the full price upfront. They play a significant role in the housing market and the broader economy, influencing factors like housing demand, household wealth, and personal finance.