A mortgage is a personal loan you can use to purchase property. Most of us must take out a mortgage in order to purchase a home. However, you will be expected by any lender to provide a downpayment in order to attain a mortgage. A typical downpayment is 25% of the purchase price of your home, but you can put down as little as 5%.
After the downpayment, the remainder of your loan is called the principal. Interest is added to this number as compensation to the lender for using their money. You are expected by the lender to make regular payments to pay down the principal.
Many lending institutions suggest that you apply for mortgage pre-approval. By doing this before deciding on buying, or building, a home you can feel confident in making an offer or decision without fear of being turned down by your chosen lending agency. However, it should be noted that even if you are pre-approved, final mortgage approval still required a final review of the property and your financial situation before going through.