What is Mortgage?
A long-term loan used to purchase real estate, where the property itself serves as collateral for the debt.
A mortgage is a specific type of loan designed for buying property, typically with a term of 15 to 30 years. The purchased home acts as collateral, meaning the lender can seize it through foreclosure if the borrower fails to make payments.
Monthly mortgage payments consist of principal (paying down the loan balance) and interest. The total interest paid over the life of the loan is heavily influenced by the interest rate and the loan term.
ExampleTo buy a $300,000 house, you might put down a 20% ($60,000) deposit and take out a 30-year fixed-rate mortgage for the remaining $240,000.