Which mortgage type is secured by the tenant's interest in a leased property?

The correct answer is the leasehold mortgage. This type of mortgage is specifically designed to secure the tenant’s interest in property that is leased rather than owned. In situations where a tenant holds a long-term lease on a property, they can use their leasehold interest as collateral to obtain financing, much like how a homeowner uses the title of their property to secure a regular mortgage.

Leasehold mortgages facilitate access to capital for tenants who may not have ownership but have significant rights and interests in the property during the lease term. This financial instrument is particularly useful in scenarios where leasing is a common practice, such as in certain commercial and real estate developments. It allows tenants to leverage their lease agreements to fund improvements, business operations, or other investments.

Other types of mortgages, such as collateral mortgages, vendor takeback mortgages, and discount mortgages, do not specifically pertain to securing a tenant's interest in leased property, thus making them less appropriate in this context. A collateral mortgage might retain a wider scope of security, including various assets, while a vendor takeback mortgage refers to financing provided by the seller to the buyer, and a discount mortgage typically describes a loan with interest deducted upfront.