What is a mortgage?

A mortgage is fundamentally a type of secured loan specifically designed for purchasing real estate. It involves borrowing money from a lender, with the property itself serving as collateral. This means that if the borrower fails to make the necessary repayments, the lender has the right to take possession of the property through a process called foreclosure. Mortgages typically have a long repayment period, often spanning 15 to 30 years, and the interest rates can vary based on the market and the borrower's creditworthiness. This secured nature of a mortgage is what differentiates it from other loan types, as it is specifically tied to real estate transactions, ensuring both the lender's investment and the borrower's commitment to payment through ownership stakes in the property.

The other options represent various forms of loans that do not fit the specific criteria of a mortgage. Unsecured loans, for instance, typically do not require collateral and are often used for personal goods, while short-term loans are designed for quick financing needs, such as business investment. Additionally, loans for purchasing vehicles, while they may also be secured, are typically characterized as auto loans rather than mortgages.