Canada Mortgage Professionals Complete Practice Exam 2025

In the context of borrowing, a mortgage is primarily defined as a legal method by which a borrower can pledge property to the lender as security for a debt. This definition highlights the essential characteristic of a mortgage: it is a secured loan where the property being purchased or refinanced acts as collateral. If the borrower defaults on the loan, the lender has the legal right to take possession of the property through foreclosure, thus ensuring the lender's financial interest is protected.

The concept revolves around the specific relationship between the borrower, the lender, and the property involved in the transaction. It is not merely a promise to repay (although that is part of the loan agreement) or a method to transfer ownership (which is more about the deed or title). Additionally, while loans may be temporary and secured by collateral, mortgages are defined by their long-term nature and the legal framework surrounding property rights. This makes the definition of a mortgage as a mechanism for pledging property clear and precise, distinguishing it from other forms of borrowing.