Mortgage versus home loan - Do they mean the same thing?
Most people use ‘home loan’ and ‘mortgage’ interchangeably, however they actually refer to two entirely separate things.
What is a home loan?
A home loan is the sum of money a lender lends you to purchase your chosen property. You pay this money back to the lender over a number of years, along with interest on the loan calculated at either a variable (fluctuates with the market) or fixed (1 to 10 years) interest rate.
What is a mortgage?
A mortgage is a security measure that’s put in place when you take out your home loan that protects the lender if you default on your repayments. If you don’t pay the money back, the mortgage gives the lender the legal right to sell your property in order to recoup their losses. The mortgage stays in force until you have paid off your home loan, after which time you own the property.
What's the difference?
A home loan is a means of buying a home when you don’t have the money yourself, while a mortgage is a means of guaranteeing a loan and protecting the lender from non-payment.
If you’re planning on buying a property, it’s good to keep informed. You can contact our expert team at Tiimely Home any time if you’re ever unsure or need clarification.
Found in:
- First home owner
- Home loans explained