What is the primary purpose of a mortgage in real estate transactions?

The primary purpose of a mortgage in real estate transactions is to secure a loan by using the property as collateral. When a borrower takes out a mortgage, they are essentially agreeing to allow the lender to place a claim on the property in case of default. This means the lender has the right to take possession of the property through foreclosure if the borrower fails to make the required payments.

By using the property as collateral, the mortgage provides a level of security for the lender, making it less risky to lend a significant amount of money. This arrangement also enables borrowers to access large sums of capital necessary for purchasing real estate, which they might not otherwise be able to afford upfront.

Other options do not accurately reflect the primary role of a mortgage. For example, providing funds for purchasing a vehicle doesn’t relate to real estate transactions, while serving as an investment vehicle for lenders describes a broader financial perspective that is not exclusive to mortgages. Similarly, guaranteeing rental income pertains to property ownership and leasing rather than the mortgage mechanism itself.