What does a mortgage deed primarily create?

A mortgage deed primarily creates a security interest in real property, which means it secures the lender's interest in the property being financed. When a borrower takes out a mortgage, they are not actually transferring the ownership of the property to the lender; instead, they are using the property as collateral for the loan. This security interest allows the lender to claim the property if the borrower defaults on the loan, while the borrower retains ownership and the right to occupy the property as long as they meet the repayment terms.

In contrast, a legal obligation to repay a loan outlines the borrower's promise to repay the funds borrowed, but it does not create the actual security lien on the property. Similarly, a transfer of property ownership would indicate that the property has changed hands permanently, which is not the case with a mortgage deed. Lastly, a rental agreement pertains to the lease and use of property without transferring ownership, which is entirely separate from the functioning of a mortgage deed. Thus, the correct choice reflects the essential role of the mortgage deed in securing the lender’s investment through a legal claim against the property.