Mortgages UK FAQs: What is a Mortgage?

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Q: What is a Mortgage?

A: A mortgage is a form of loan, which is taken out against property (real estate). The definition of property may include a house, a flat, or an apartment, although mortgages cannot be taken out against any other assets such as a vehicle, stocks and shares, or other investments.

A mortgage can also be taken out against an office, a shop or a factory (this is known as a commercial mortgage), or against a property which the owner intends to rent out to other tenants (buy-to-let mortgage).

The origins of the word mortgage come from the ancient French words mort (death), and gage (a pledge). However, taking out a mortgage did not mean that the mortgagee expected to die if he did not pay back the mortgage; it merely meant that his entitlement to the mortgaged property would cease if he fell behind on his payments.

Other mortgage related terms:

• Mortgagee - these can either be the person who takes out the mortgage, or it can be the bank or building society which makes the loan.
  
• Lender – this is the usual term for the organisation making the loan. In the UK, this is usually a bank or building society. In the USA, Credit Unions may offer mortgages to their members.
  
• Home Loan – the term used for a mortgage in the USA.

For a full list of the mortgage related terms, please consult our mortgages glossary, or visit our full financial services glossary.

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