The Definition of Mortgage

What is the definition of mortgage? It is the transfer of an interest in property (or the equivalent in law – a charge) to a lender as a security for a debt – usually a loan of money. A mortgage in itself is not a debt; it is the lender’s security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed.

In other words, the mortgage is a security for the loan that the lender makes to the borrower. Mortgages are strongly associated with loans secured on real estate rather than on other property (such as ships) and in some jurisdictions only land may be mortgaged in most jurisdictions. It is the standard method by which individuals and businesses can purchase real estate without the need to pay the full value immediately from their own resources.

An investor that lends money secured by mortgages on real estate is called as mortgage lender. In today’s world, most lenders sell the loans they write on the secondary mortgage market. When the mortgage lender sells the mortgages they earn revenue called Service Release Premium.