At its simplest, a mortgage is a loan used to buy your home. Unlike many other types of lending (such as credit cards) a mortgage is secured against your home.
You borrow a sum of money - the capital. This is either paid back in part each month over a certain period of time, or all at once at the end of the term.
You also pay interest to the lender for the money you borrow. This is calculated as a percentage of the outstanding balance. Your monthly payment will either include an element of capital and interest or will only cover the interest part of the loan.