Living rent-free with a friend means:

Living rent-free with a friend specifically refers to the situation where you are residing in a space without having to pay rent to the property owner or the person you are staying with. This means that you are not engaged in a formal rental agreement that requires you to provide financial compensation for your living situation. In this context, rent is typically defined as a regular payment made for the use of property, and being in a rent-free arrangement indicates an absence of such payments.

The other options describe different scenarios that do not align with living rent-free. For example, not making mortgage payments could imply home ownership or assisting a friend who owns the property, but it does not capture the essence of living rent-free, which is focused on the lack of any rental payment. Similarly, subletting a property involves paying rent to an existing tenant, and paying lower than market rent still requires some form of rent payment, albeit reduced. Thus, the essence of the phrase "living rent-free" aligns entirely with option B.