Majority of loans are unprotected.  The fee charged against your credit card is an unsecured loan.  The private loan given by a friend is an not secured loan.  The scholar loan you got for your university education is an not secured loan.

However, there are loans which need some kind of safety.  This security is a valuable property - most of the time, your house - which is yours.  This is what we name as a mortgage loan.  The idea is to include this possession, the mortgage, to the satisfaction of the loan.  If you neglect to pay the loan once it becomes scheduled and mandated, the creditor can decide to foreclose the belonging to satisfy  the  said mortgage loan.

Why are mortgage loans needed by somelending companies?  Simply, a mortgage reduces the dangers that these lending companies have to take on when giving out loans to the debtor.  With the mortgage attached to the loan, the creditor can most of the time use the same for the execution of the loan if the borrower becomes neglect in settling his loans.

Because the lending companies will take on fewer risks, they can give mortgages with lower interest charges, which is usually the occurence with mortgage loans.

In addition, credit insitutions can also give out loans involving bigger amounts, because the mortgage  will be there to protect thefulfillment of the same anyway.

Foreclosure is the method of selling the mortgaged asset, where the profits will be applied to the approval of the loan.  The trading feature of foreclosure happening comes in the form of public auctions where the initial price is the reasonable selling value of the belonging.

The most well-known means of mortgage loans is a home mortgage loan, where the debtor borrows support to finance the acquitsition of a house.  The house itself will function as a mortgage to secure the said credit.  If the debtor forgets to satisfy the loan after the delay of the scheduled time, the creditor will collect the mortgage and foreclose the same.