Mortgage
Long-term loan for property purchase, secured by property.
Formula
Monthly Repayment = (Principal × Monthly Interest Rate) / (1 − (1 + Monthly Interest Rate)^−n)
Real World
When Caffè Nero expanded its estate, it used commercial mortgages to purchase freehold properties, spreading the cost over 25 years rather than depleting working capital.
Exam Focus
Identify that a mortgage is secured debt — if property value falls, the lender can repossess; include this risk in evaluation answers.
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