A mortgage is a means of securing charge on a property of other immovable assets usually for the purpose of financing its purchase. The word mortgage derives from the French words mort meaning dead, and gage meaning pledge. The implication was that the property was dead or useless for the borrower if he could not repay the loan. In most countries it is common to fund both residential and commercial properties by creating a mortgage.

The primary parties in creating a mortgage are the lender and the borrower. The lender is also known as the creditor or the mortgage, the one to whom the property is mortgaged. Similarly the borrower is also known as the debtor or the mortgagor, the one who mortgages the property. Because of the high stakes and the complex legal issues involved both parties are usually represented by solicitors.

A mortgage usually creates a lien or right to the title of the property. It does not transfer absolute ownership to the lender. A mortgage is created by an instrument known as mortgage deed. Despite having a lien on the property, the lender has to take recourse to law to recover his funds if the debtor defaults on the payments. A legal process declaring that the debt is due and that the borrower has defaulted in the payments is required before the property can be sold.

Mortgage lenders are banks or financial institutions that lend funds to borrowers for the specific purchase of land and property, and secure the loans by way of a mortgage on the land or property created in their favor. The borrower needs funds to purchase the land or property. He expects to pay back the loan along with interest by utilizing the assets in his business or from some other expected income. Mortgage lenders have funds available but are unable to leverage the funds to produce high returns. Hence both benefit from the transaction.

Mortgage lenders need protection from the eventuality that the borrower will default in his commitments. Towards this end they get the assets mortgaged in their favor. The mortgage is created by a legal charge, through which the ownership of the assets remain with the borrower, but the mortgage lenders have the right to take possession of and even sell the assets. This is known as foreclosure.

Mortgage lenders are further protected by the recording of the charge in a public register. This registration makes it easier for them to foreclose the assets should the need arise. This registration serves another purpose as well. Before lending the funds, mortgage lenders carry out a search of the registers to ensure that the assets are not already mortgaged.