Mortgage is a debt instrument refers to a legal agreement between two parties wherein one party owns some debt from the other party. The lender of money is known as mortgagee and borrower of money is known as mortgagor.
The loan is given by the mortgagee in exchange of the title of any property of borrower which becomes void at the time of full repayment of loan by the mortgagor. The terms of the contract defines the interest rate also, which the borrower has to pay on the amount so borrowed.
In case of any default in payment of interest or principal by the mortgagor, the property so engaged becomes the property of mortgagee. Mortgages are also known as “liens against property” or “claims on property”.