Mortgage loan

A mortgage loan is a debt instrument that is secured by real estate held by the borrower. Under the terms of a mortgage loan, the borrower is obligated to make a series of repayments. Eventually, the principal on the underlying loan is paid off, and the lender removes its lien on the associated real estate. If the borrower misses payments, then the lender can foreclose on the property. In a foreclosure, anyone inhabiting the property is evicted, and the property is sold to pay off the residual amount of the mortgage.

Because of the presence of collateral, mortgage loans are considered to be relatively safe for lenders; therefore, the interest rates on mortgage loans tend to be lower than for unsecured debt.

Related Courses

Corporate Cash Management 
Corporate Finance 
Treasurer's Guidebook