What is a mortgage?

A mortgage is the transfer of an asset (usually the property being purchased) from a borrower to a lender as security for a loan.

Once the loan and any interest have been repaid the lender transfers the asset back to the borrower. If the asset is sold to pay off the loan, the lender must return to the borrower any excess of the selling price of the asset over the amount of the loan.

eg If a property has a value of, £100,000 and is being used to secure a loan of £75,000, the borrower is said to have an equity of £25,000 in the property.
Negative equity arises if the property value falls below the amount of the loan.