Is a Home Loan the same as a Mortgage?

Getting a property is one of the best decisions anyone can make. It is suggested among other types of investment decisions that a property purchase is better value than what could be imagined as assets. While owning a property is El-dorado, knowing the difference when seeking a loan is more vital than the right spelling of Parallelogram [I hope that is correct]. 

In today’s read, you will be having a better understanding of how you can get a property, and more importantly, find the difference between a home loan and a mortgage. 

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A mortgage loan can be taken and used for any purpose by the borrower. A mortgage loan shares a unique similarity with home loans, which is that the lender takes ownership of the property of the borrower till the repayment is complete. 

A home loan is one in which the borrower obtains funds from a bank to purchase or construct a home. You can utilize a home loan to modify your current home or to purchase land. This is frequently a secured loan, meaning that the lender holds the house as security for the loan. It is issued once the borrower has paid off the entire loan in monthly payments. If the borrower is unable to repay the loan and declares bankruptcy, the lender has the right to sell the residence to recoup the outstanding debt. 

If you consider buying a flat or a house, a home loan is less expensive because the interest rate and processing cost on a home loan are lower than the interest rate and processing fee on a credit card. 

Yes, the property or house that you are planning to buy or build a new house is the collateral in these loans. 

A house loan, in basic words, is a loan used to buy or build a new home that is not owned by the borrower. A loan against property, on the other hand, is commonly referred to as a mortgage loan. It's a loan backed by real estate that the borrower owns.

When it comes to home loans and mortgage loans, the paperwork is nearly identical. A comprehensive list of documents required when applying for a house loan or mortgage loan is provided below. Please keep in mind that these are the minimum requirements; however, depending on the demographic and issuer, certain extras may be included. 

1. Proof of Identity 

2. Proof of address 

3. Documents proving income 

4. Statements of account 

5. Documents related to real estate 

6. Returns on income [Tax] 

Because a mortgage has priority on repayment in the case of default and is a smaller risk to the lender than a home equity loan or a HELOC [Home Equity Line of Credit], a mortgage will have a lower interest rate than a home equity loan or a HELOC. 

While the home loan shares almost similar features with the mortgage loan because of a property chase, they are distinct, and the mortgage can be better used as collateral compared to a home loan.