What type of agreement allows a borrower to buy a house with borrowed money from a bank?

A mortgage is a specific type of loan that a borrower uses to finance the purchase of real estate, such as a house. In this arrangement, the bank or mortgage lender provides the funds needed to buy the property, and the borrower agrees to repay this amount over a set period, typically with interest. The house itself serves as collateral for the loan, meaning that if the borrower fails to repay, the lender has the right to take ownership of the property through a legal process known as foreclosure.

This financing mechanism is essential for individuals who may not have the full sum needed to purchase a home outright, as it allows them to spread the cost of the purchase over several years while also living in the home. The structure of a mortgage often includes fixed or variable interest rates and can come with various terms, affecting monthly payments and total interest paid over the life of the loan.

Other options, such as the sale of assets, retained profit, and owner's capital, do not directly involve borrowing for the purpose of purchasing a house. The sale of assets refers to exchanging owned items for cash, retained profit pertains to reinvesting a company's profits back into the business, and owner's capital relates to the funds contributed by the owners of a business for operational purposes. None of