Most loans are .  The amount charged against your credit card is an unsecured loan.  The personal loan granted by a friend is an unsecured loan.  The student loan you received for your university education is an unprotected loan.

However, there are loans which need some form of safety.  This security is a valuable property - most of the time, your house - which you own.  This is what we call as a mortgage loan.  The thought is to attach this asset, the mortgage, to the approval of the loan.  If you forget to pay the loan once it becomes expected and mandated, the creditor can decide to bar the belonging to satisfy  the  said loan.

Why are mortgage loans needed by somelending institutions?  Generally, a mortgage lessens the risks that these credit institutions have to take on when giving out loans to the debtor.  With the mortgage included to the loan, the creditor can most of the time utilize the same for the fulfillment of the loan if the borrower becomes remiss in settling his loans.

Since the lending companies will undertake fewer dangers, they can give loans with lesser interest charges, which is usually the case with mortgage loans.

Additionally, credit insitutions can also extend loans comprising larger sums, because the mortgage  will be available to protect thefulfillment of the same anyway.

Foreclosure is the means of vending the mortgaged belonging, where the income will be useful to the approval of the loan.  The vending feature of foreclosure happening comes in the form of public auctions where the starting amount is the fair selling value of the possession.

The most famous method of mortgage loans is a home mortgage loan, where the debtor borrows funds to fund the purchase of a house.  The house itself will work as a mortgage to safeguard the said credit.  If the debtor fails to satisfy the loan after the lapse of the scheduled period, the creditor will collect the mortgage and foreclose the same.