A mortgage is a loan that uses a property as security to ensure
that the debt is repaid. The borrower is referred to as the mortgagor,
the lender as the mortgagee. The actual loan amount is referred
to as the principal, and the mortgagor is expected to repay that
principal, along with interest, over the repayment period (amortization)
of the mortgage.
A mortgage can be used for financing many different things, including:
Purchasing or constructing a new home
Purchasing an existing home
Refinancing to consolidate debts
Financing a renovation
Financing the purchase of other investments
Financing the purchase of investment property
Since a mortgage is a fully secured form of financing, the interest
you pay is usually less than with most other types of financing.
Many people use the equity in their homes to finance the purchase
of investments. Using a Secured Line of Credit, or a fixed-rate
mortgage, the interest costs are lower, and they can even write
off those interest costs against their taxable incomes.