What is a mortgage?
A mortgage is a secured loan, with a piece of real estate such as a home or farm acting as the security. The lender can take possession in the event of a default, but must surrender any rights over the property once the loan has been repaid.
Where have you heard about mortgages?
Across the developed world they're a common method of financing the purchase of residential property and you may well have seen them advertised. Mortgage rates - the interest charged on such loans - are frequently in the news.
What you need to know about mortgages.
There are many varieties of mortgages but the underlying principle is the same - the lender has a charge over the property up until the loan is paid off. The variations apply to the arrangements for the payment of the original sum and the interest.
Traditional mortgages involved a mixture of capital and interest repayments over the life of the loan, while once-popular endowment mortgages put the payments in an investment fund to repay the loan at the end of the term. Fixed-interest mortgages take the uncertainty out of the cost of borrowing, floating-rate mortgages do not.
Find out more about mortgages.
To learn more about the credit landscape, see our definition of debt.