What is a mortgage?

If you want to buy a home how will you pay for it?  There are two options.  Either you have the money saved, receive a gift or inheritance and can simply buy it.  If not then you will need to borrow the money, a loan, most likely from a bank.

Basic definition of a mortgage

When you buy something on credit or borrow money to buy a car you are taking a loan.  When borrowing money to buy a home it's still a loan but we refer to it as a mortgage which is simply a different name to identify that the money is being used to fund the purchase of a home.

The parties to a mortgage

Whether borrowing from a bank or another institution we always refer to them as the lender.  The person or people who are taking out the mortgage are referred to as borrowers.

Paying the mortgage

During the application process, the borrower agrees with the lender how much will be borrowed, how many years it will take to be repaid (typically 25-30 years) and what the interest rate will be.

Collateral

Every mortgage lender requires collateral, in case you cannot pay they will take the collateral and sell it.  In the case of a mortgage that will be the property being purchased.  So a borrower risks losing their home if they cannot keep up the repayments.

That is a very basic view but I will expand on these as you read the guides.