What does a mortgage primarily serve as?

A mortgage primarily serves as a pledge for the repayment of a loan. In the context of real estate, a mortgage is a legal agreement between a borrower and a lender in which the borrower receives funds to purchase a property while using the property itself as collateral. This means that the mortgage secures the lender's interest in the property until the borrower repays the loan amount.

If the borrower fails to meet their repayment obligations, the lender has the right to take possession of the property through foreclosure. The essential function of a mortgage is therefore to ensure that the lender is protected and has a claim against the property as a way to recover the owed amount. This understanding is fundamental to mortgage lending and residential finance.

Other options describe concepts that do not accurately define the role of a mortgage in a lending context. For example, a rental contract pertains to tenancies and does not include a loan component, while transferring ownership typically involves a deed rather than a mortgage. Similarly, verifying property title is a step in the property transaction process, but it does not encompass the loan repayment aspect that a mortgage provides.