Home › Finance › Real Estate & Property › Mortgage

Mortgage

MOR-gij /ˈmɔːrɡɪdʒ/

nounverbB2TOEFLIELTS

formalbusiness

A legal agreement by which a bank or other creditor lends money at interest in exchange for taking title to the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.

While technically the lender holds the title until payment, in common parlance, 'mortgage' refers to the loan itself that is secured by the property.

The story behind the word. The word 'mortgage' comes from Old French, combining 'mort' (dead) and 'gage' (pledge). It literally means a 'dead pledge'. This rather grim name refers to the idea that the pledge (the property) 'dies' or is extinguished either when the debt is paid off, or when the borrower defaults and the property is taken by the lender. So, it's a pledge that's 'dead' to the borrower if they fail to pay!

Word relationships

Home loan: More informal and general term for a loan used to buy a home, often interchangeable with mortgage.
Property loan: Broader term, could apply to commercial or investment properties as well as residential.

Commonly confused with

Loan: A 'loan' is any borrowed money; a 'mortgage' is a specific type of loan secured by real estate.

Word family

mortgagee (noun): The lender in a mortgage agreement.
mortgagor (noun): The borrower in a mortgage agreement.

Collocations

take out a mortgage
mortgage rates
mortgage payment
fixed-rate mortgage
adjustable-rate mortgage

Example sentences

"Many first-time homebuyers struggle to understand the complex terms of their mortgage agreement." Buying a home often requires securing a mortgage.
"The Federal Reserve's decision to raise interest rates directly impacted the cost of new mortgages." Economic conditions can affect mortgage rates.

Memory hook

Think of a MORTuary (death) and a GAGE (a measure or pledge). A MORTGAGE is a 'death pledge' because the pledge on your house 'dies' when you pay it off. Death Pledge

When not to use

Do not confuse with a simple loan; a mortgage specifically involves property as collateral.

Fun facts

In some legal systems, a mortgage involves the transfer of legal title to the lender, which is then transferred back to the borrower upon repayment. In others, the borrower retains legal title, and the mortgage creates a lien on the property.

Related words

Foreclosure, Equity, Property

Explore more words

creditor, loan, interest, debtor, debt, collateral

Also appears in

Finance → Banking & Financial Institutions