A mortgage is a type of loan used to purchase real estate, where the property itself serves as collateral for the loan. Typically offered by banks or mortgage lenders, a mortgage allows buyers to finance a home or property by making monthly payments over a set period, usually 15 to 30 years.
The loan includes both principal (the original amount borrowed) and interest, which is the cost of borrowing the money. Mortgage terms, including the interest rate (fixed or variable) and repayment schedule, significantly affect the total cost of the loan.