Differences Between Mortgage And Home Loans

First of all, let's look these terms up in the dictionary and define them in simple words:

A mortgage is a loan to purchase a property. A mortgage uses the property as collateral to guarantee repayment of the loan. The borrower gives the lender a lien against the property, and the lender can foreclose on the property if the borrower does not repay the loan per the agreed terms.. a mortgage in itself is not a debt, it is evidence of a debt.

On the other hand LOAN is "An act of lending; a grant for temporary use: asked for the loan of a garden hose."

So, simply is something that someone lends you. You can ask for a loan to a bank or a private lender and you can ask your neighbour for the loan of the garden hose... and when you finally stop using it, you have to give it back. Of course in the case of the hose you might not have to pay interest... or perhaps your neighbor asks you for beer or a cup of tea as retribution. In case of asking for a loan in a bank or a private lender, you will have to pay interest.

If you need to borrow a hose to a neighbor, you will think about which one is more close to you, perhaps your friend, and the one you have no troubles with!!! You won't ask for the hose to that neighbor you have to argue all the time because one of his tree's branch is on your property and you have to clean the leaves!

Well, with home loans is almost the same: you won't ask for a loan to that bank that is calling you every day to ask you for the money you already own them!

Principal differences:

-In a mortgage, your mortgagee can sell your property to collect the money. This is called foreclosure. In a loan, even if it is secured by a mortgage, you still have full title to the property. No one else has rights of ownership.

- The word mortgage is derived from two other words "mort"=death "gage"=grip. When you have a mortgage the lender has you in a death grip. A loan is just something you borrow.

Bottom Line

by: Robert Arckwrite

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