What is the purpose of a mortgage in property transactions?

The purpose of a mortgage in property transactions primarily focuses on securing financing for the purchase of property. When an individual wants to buy a home but does not have enough cash to pay the entire purchase price upfront, they can turn to a mortgage as a solution. By obtaining a mortgage, the buyer borrows money from a lender, which enables them to make the purchase.

In this arrangement, the property itself serves as collateral for the loan, meaning if the borrower fails to meet their payment obligations, the lender has the right to foreclose on the property to recover the owed amount. This relationship between the property being financed and the obligation of the borrower to repay the loan is fundamental to how mortgages operate within the real estate market.

While mortgages can sometimes offer tax benefits to borrowers, this is not their primary purpose. Similarly, determining property values and establishing rental agreements are not functions of a mortgage. The essential role of a mortgage lies in facilitating the financial aspect of property ownership.