What is a Mortgage?

A mortgage is the money you borrow from lender at a bank or financial institution to buy a house. Most people don’t have enough savings to fully buy the home they want, so you can use this kind of loan to make up the difference.

You have to pay that money back every month, plus interest, usually over the course of 15 or 30 years. This monthly payment system is called an amortization schedule.

If you stop paying it, the lender can take away your property. This is known as foreclosure. A mortgage is a legally binding contract that gives rights to the lender and ensures that you will pay the money back.