UK Clinical Aptitude Test (UKCAT) Practice Test

What is a "mortgage" primarily associated with?

1. A. A type of lease agreement

2. B. Borrowing money to purchase property

3. C. Renting an apartment

4. D. A short-term loan

The correct answer is: B. Borrowing money to purchase property

A mortgage is primarily associated with borrowing money to purchase property. In this arrangement, an individual or entity takes out a loan from a lender, typically a bank or a mortgage company, with the specific purpose of buying real estate, such as a home. The property itself serves as collateral for the loan, meaning that if the borrower fails to repay the loan, the lender has the right to take possession of the property through a legal process known as foreclosure. This financial concept is crucial in real estate transactions, as it enables individuals to buy homes without needing to pay the full price upfront. Mortgages usually involve a long-term commitment, with repayment plans often spread over 15 to 30 years, allowing borrowers to manage their finances more effectively while fulfilling the dream of homeownership. The other options relate to different financial agreements but do not accurately describe the nature of a mortgage. A mortgage is not a lease agreement, which typically governs the rental of property for a defined period without transfer of ownership. Similarly, it is distinct from renting an apartment, which involves paying for use of the space rather than purchasing it, and a short-term loan, which generally involves borrowing for a brief period rather than the extended terms typically associated with mortgage agreements.