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A mortgage is a type of loan specifically relating to the purchase or property. In most cases it is used to mean a loan that allows a person or family to purchase a home. The specific inner workings of a mortgage loan vary from country to country around the world and change over time.

Most of them depend on the state of the housing market in that area. Some of the factors that vary include amortization period, interest rate, amount of money lent and penalties for nonpayment. Mortgages differ from standard loans with the addition of extra fees, such as the closing fee for buying a house.

Mortgages are generally long-term loans. The amount of money being lent is quite high, so it takes a significant amount of time to pay off that money and the interest laid on top of it. In most cases the amortization period -- that is, the time it takes to pay off the loan completely -- is 30 years.

Prior to the 1980s, every mortgage has a fixed interest rate and a period of 30 years. In the 80s, adjustable rate mortgages were introduced. These mortgage loans typically had low introductory rates, but the interest rate was able to increase each year with no limit. This makes the loan harder to pay off, while rewarding the bank with more money when it is paid off.

In a typical mortgage, a moneylender loans a significant amount of money to a borrower. This amount of money is typically nearly 80 percent of the value of the home the borrower is looking to purchase. The interest rate may be set or may be variable. To ensure that payments are made on the loan as time passes, the home itself is collateral for the loan. This means that if payments cease for any reason, the moneylender can repossess the home through the process of foreclosure.