What is the main purpose of a mortgage?

The primary purpose of a mortgage is to function as a loan that is secured by real estate property. In this context, it enables a borrower to purchase a property while using that same property as collateral for the loan. This means that the lender has a legal claim to the property if the borrower fails to repay the loan according to the agreed terms. The mortgage allows individuals to afford homes by borrowing money and is typically structured with monthly payments over a specified period.

In contrast, immediately transferring ownership of a property is not the purpose of a mortgage, as mortgages are financial instruments designed to facilitate borrowing against property rather than transferring ownership immediately. The concept of insurance against property loss pertains to a homeowner's insurance policy, which protects against risks such as damage or destruction of the property, rather than relating to the financing of the property. Similarly, while personal loans for home repairs are important, they are distinct from a mortgage, which specifically deals with financing the purchase of real estate. Thus, identifying the correct function of a mortgage clarifies its role in real estate transaction financing.