In banking terminology, the term Mortgage refers to a loan that a lender, usually a financial institution or bank, makes to a borrower secured on real estate. The interests of the Mortgage holder will generally be secured by a lien on the property that may result in a foreclosure sale in case the borrower defaults or fails to make payments as promised.
For example, an individual might take out a Mortgage loan from their bank to purchase their home. In return for providing the funding for the purchase, the lender will obtain a security interest or lien on the property will then be used as collateral or security for the Mortgage loan’s repayment. This lien is recorded in the register of title documents and made public information, but will be voided upon full payment of the Mortgage on the property. Payments on the loan will usually be made in pre-determined monthly payments until the Mortgage is fully paid off or the home is sold and repayment made out of escrow. A Mortgage consists of a secured loan because the property itself is put up as collateral.