A mortgage is a financial arrangement in which a person borrows money from a lender, typically a bank or a financial institution, to purchase a property such as a house or an apartment. The borrower (also known as the mortgagor) agrees to repay the loan over a specified period, typically spanning several years, along with interest, fees, and any other agreed-upon charges.

The property being purchased serves as collateral for the mortgage. This means that if the borrower fails to make the required payments, the lender (also known as the mortgagee) has the right to take possession of the property through a legal process called foreclosure. Foreclosure allows the lender to sell the property to recover the remaining loan balance.

Mortgages come in various types, including fixed-rate mortgages and adjustable-rate mortgages (ARMs). In a fixed-rate mortgage, the interest rate remains constant throughout the loan term, providing predictability in monthly payments. On the other hand, an ARM has an interest rate that can fluctuate periodically based on market conditions, potentially affecting monthly payments.

When applying for a mortgage, lenders assess several factors, including the borrower’s credit history, income, employment status, and the property’s appraisal value. These assessments help determine the loan amount, interest rate, and repayment terms offered to the borrower.

It’s worth noting that mortgage regulations and practices can vary across countries and even within different regions. It is essential for prospective borrowers to understand the specific terms, conditions, and legal implications of mortgages in their respective jurisdictions.