What is the different between a Home Loan and a Mortgage?

Both mortgages and home loans appear to be used interchangeably when borrowing to buy real estate property. So, is there a difference?

Different Between a Home Loan and a Mortgage?


A loan is a relationship between a borrower and a lender. The borrower is called a debtor, and the lender is also called a creditor. The money lent and received in this transaction is known as the loan: the lender (creditor) has loaned out money while the borrower (debtor) has taken out a loan. The total amount of money borrowed is called the Principal. The lender will charge a fee for lending out this money (as most lenders aren't nice enough to do this for free), which is called Interest.

Home Loans

Home loans are simply types of loans used to purchase real estate.

Real Estate is the term for land and anything that is permanently affixed to it (like a house). Items attached to the buildings are referred to as Fixtures i.e. lights, pipes, wiring etc...

Property that is not affixed is regarded as Personal property i.e. cars, fridges, chairs etc.


A mortgage is not a loan per se, but a form of security interest for a home loan taken over the real estate property that you are purchasing i.e. A mortgage is a legal agreement that conveys the conditional right of ownership on a real estate property by its owner (the mortgagor) to a lender (the mortgagee) as security for a home loan.

When you purchase a real estate property using a home loan, the property is placed in your name and is owned by you. However, the security (Mortgage) means that if you (the Mortgagor) breach the home loan contract terms set by the lender (the Mortgagee), then they have a right to collect their interest. For example, if you fail to make your home loan repayments, then you become in default to your lender. In certain cases, if you as the mortgagor (borrower) default on your mortgage repayments, the mortgagee (lender) can repossess the property and then sell it off.

Real estate mortgages are the most common type of mortgage. When personal property items such as cars, jewelry etc... are mortgaged, it is called a Chattel mortgage.


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