What is the main purpose of a mortgage loan?

The main purpose of a mortgage loan is to buy real estate. A mortgage is a specific type of loan that is secured by the value of the property being purchased, which serves as collateral for the loan. This borrowing arrangement allows individuals to acquire residential or commercial properties without needing to pay the full purchase price upfront. Instead, borrowers can spread their payments over a lengthy term, typically 15 to 30 years, making homeownership more accessible.

While other financing options exist for purchasing vehicles, financing a business, or covering education expenses, a mortgage is specifically designed to facilitate real estate transactions, reflecting its importance within the housing market and economic framework.