Mortgage interest is an interest charged on a loan. The loan is used to purchase a piece of real estate, usually a place of residence, though the term is used interchangeably for business property too. This form of interest is charged for both primary and secondary loans, and any other type of loan directly related to a mortgage. The amount of interest is dependent on the loan agreement. However, according to tax code, most mortgage interest is deductible on federal income taxes, filed by the taxpayer for his or her primary residence. This tax deduction is deducted on form 1040 of the yearly tax return documents. Usually, the deduction is larger at the beginning of the loan period.