Mortgages
Long-term loans for property purchase.
Formula
Monthly Repayment = (Loan Principal × Interest Rate) / [1 − (1 + Rate)^−n]
Real World
When Nationwide Building Society offers a 25-year fixed-rate mortgage at 4.5%, a buyer purchasing a £250,000 home uses the property itself as collateral against the loan.
Exam Focus
Always state that mortgages are secured loans — this is a key distinction examiners expect when comparing sources of finance.
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