What is the term for a loan that secures an interest against real property?

A mortgage is a loan specifically designed to secure an interest against real property, which typically involves real estate transactions such as purchasing a home or refinancing an existing loan. When a borrower takes out a mortgage, they pledge the property as collateral to the lender. This means that if the borrower fails to make the loan payments, the lender has the right to initiate foreclosure proceedings to recover the owed amount by selling the property.

Understanding the characteristics of a mortgage is essential in real estate transactions, as it involves legal procedures and financial responsibilities related to property ownership. Mortgages can come in different forms, such as fixed-rate or adjustable-rate, but the central theme remains that they are directly tied to real estate and provide the lender with a security interest in the property.

In contrast, personal loans typically do not require collateral and can be used for various purposes not necessarily tied to real estate. Equity loans and lines of credit are forms of borrowing that may use the equity in a property as security, but they are not classified as mortgages themselves.