What is a mortgage?

With a mortgage, a lender pays most of the price of a home and the borrower repays it, plus interest, over a set term, often 25 or 30 years. The buyer usually pays a deposit or down payment, commonly between 5 and 20 percent of the price. If the borrower fails to repay, the lender can take the property through foreclosure or repossession. Mortgages can have fixed interest rates, which stay the same, or variable rates, which move with the market. The word comes from old French meaning “death pledge”, because the deal “dies” when the debt is repaid or the borrower defaults.