What is the difference of the mortgage loan

What is different from mortgage loan

For most ordinary people the difference between the credit and mortgage seems irrelevant - any option involves getting to borrow money from the subsequent payment of certain parts. Meanwhile, there is a difference and it is expressed in the difference between the conditions of registration and reception, as well as the repayment of the loan taken. Let's see what is different from a mortgage loan and that it is better?

Credit - the definition and the conditions for obtaining
The loan is defined as a form of relationship, during which the value of the available free copyright is transferred to the jurisdiction of another entity. In another way, this concept implies that the creditor, having some money or goods can transfer it to another person on the terms of repayment, urgency and payment. The borrower receives a loan product is obliged to repay the debt within a certain period, together with accrued interest, which stipulates the terms of the contract. In the context of contemporary realities often become the subject of the loan funds.


Credit is ready to offer its customers any bank, but credit conditions may vary. In particular, the interest rate can vary from 16 to 75% per annum, depending on the package of the documents submitted and the level of solvency of the borrower. The loan may be provided as a guarantee and be without collateral. Term lending is most often no more than five years.

Credits can be targeted, that is intended for a specific purpose - the purchase of household items, for the repair of apartments, on receipt of payment and so on. Maybe a loan and misuse. In this case, the client is not obliged to explain bank lending target.

Money received in the loan, the borrower can spend on that wish. In this case the acquired property on credit does not become a bank guarantee and the owner can dispose of it at their discretion.

Mortgage - this is, and under what conditions it is made?
The mortgage is also a form of lending, but it is issued for a specific purpose - a mortgage loan can be spent only on the purchase of housing. Under the terms of the mortgage contract purchased property is pledged to the bank that becomes collateral loan for the entire loan period. Thus, if a customer falls into a difficult financial situation and can not pay the debt, the real estate property will go to the bank to collect a debt.

For registration of the mortgage will require a much larger number of documents than a direct loan. Also you need to pay mandatory insurance and to pay some of the bank's commission. Dispose of the apartment mortgage borrowers will be able only after payment of the entire amount of the debt, until this moment, he is only entitled to reside in the purchased housing.

The interest rate when you make a mortgage is much lower than the rate on consumer credit. If the normal lending rate can reach 75%, the mortgage can be issued under the 10-15% per annum. Upon cancellation of the insurance percentage may increase by a few points, but for the majority of banks mortgage insurance is a must.

A significant advantage of the mortgage and lending terms. Mortgage loan can be taken for a period of 20-30 years. In addition to the amount proposed in mortgage lending, at times more consumer high.

Compare and contrast the loan on mortgage
The difference between the mortgage loan can be generally defined as a special mortgage credit form. Lending involves a loan of money for a certain period to repayment. The loan may, provided a guarantee or not, but in any case for the use of borrowed funds necessary to pay the interest agreed in advance. Mortgage - a cash loan to pThe main differences between the loan and mortgage can be expressed as:

- Credit - is a broad concept, while the mortgage is only one form of credit;
- Loan can be collateralized or unsecured, while the mortgage contract is always made out on bail acquired property;
- As a credit facility can serve as money, as well as certain goods in mortgage lending borrower always gets money for the purchase of housing;
- The issuance of the loan can be engaged in any financial institution, and the mortgage is the prerogative of the banking institutions;
- The size of the consumer depends on the collateral value of collateral and proof of income of the borrower, the amount of mortgage loan is determined on the basis of the applicant's income and can be increased to the maximum.

Thus, the difference between the loan consumer and mortgage becomes apparent. Each type of loan has its pros and cons. Choosing a loan product is based on their capabilities and needs.urchase housing at which purchased property becomes collateral until full repayment of the loan. And in fact, and in another case, the borrowed funds must be returned to the specified in the contract period.