Defining Mortgages: Unraveling the Basics of Home Loans

Understanding the Concept of Mortgages

A mortgage, often referred to as a mortgage loan, is a financial arrangement where a borrower obtains a sum of money from a lender to acquire or sustain a piece of real estate, typically a house and the land it resides on.

Mortgage Loans and Their Collateral

Mortgage loans are secured loans. This implies that the lender holds the property as collateral until the borrower fulfills their financial obligation by repaying the loan in its entirety.

Distinctions Between Home Loans and Mortgage Loans

Terminology

Home loan and mortgage loan are interchangeable terms. Both refer to loans specifically designed for financing residential properties.

Purpose

Both home loans and mortgage loans must be used to purchase or refinance a home. They cannot be used for other purposes.