Mortgage

A mortgage is a long-term loan secured against real property. The borrower agrees to a series of fixed monthly payments; the lender holds a lien on the property until the loan is fully repaid. If the borrower defaults the lender can foreclose and sell the property to recover the outstanding balance.

The math is the standard amortising-loan formula. Given loan amount P, monthly rate r (annual rate divided by 12), and term n months, the monthly payment is:

M = P · r / (1 − (1 + r)^−n)

In a typical 30-year fixed-rate mortgage, early payments are dominated by interest and late payments by principal. The crossover happens around year 15-18 depending on rate. This front-loaded interest pattern is the reason refinancing or selling early can be expensive relative to the total interest you’d pay over the full term.

Adjustable-rate mortgages (ARMs) replace the fixed rate with one that resets periodically against an index plus a margin. Interest-only mortgages defer principal payments for a fixed initial period. Both trade certainty for cash-flow flexibility.

Use our mortgage calculator for the monthly-payment math, or our 15-year vs 30-year guide for the term-choice question.