Mortgage and loan are two forms of financing that allow you to obtain a quantity of money to be repaid in monthly installments for longer or shorter periods of time. Although they are often used interchangeably, in reality they are not.
Mortgage and loan are two different types of financing
The first real difference lies in the amount of money required. The mortgage covers a higher figure than a loan in most cases. This is why a mortgage is granted when buying a house or property. Given the high sum of money of this loan, the mortgage is repaid over at least 10 years with fairly high monthly installments. A loan, on the other hand, can cover the request for a loan for much lower amounts than a mortgage. Since the amount of money granted with a loan is less than that of a mortgage, the loan does not need a guarantor to be granted.
A further difference regards the obligation to specify the reason for the financing: with the mortgage it is necessary to declare what will be purchased; with the loan, however, it is not mandatory to declare the intended purpose for this sum of money. The mortgage must always be aimed at purchasing an already pre-established asset; this means that, even before applying for a mortgage, you must present the purchase project or a document certifying the intention to purchase. A mortgage can reach thirty years of payment by installments for very high sum of money, such as that of buying a new home. For this reason the lender always requires a guarantor to approve the mortgage.Even the mortgage on the house can be a valid guarantee for the loan.
Finally, the loan can also be used for the costs of renovating the building for maintenance or for the purchase of home furniture.
Is Mortgage or Loan More Profitable?
The answer is: it depends. It depends on the use that must be made of this sum of money: a loan is disbursed faster, does not require a notary to sign and involves less expenses for the practice; on the other hand, a mortgage gives access to higher amounts, has a longer duration and lower rates than loans.
Be careful not to confuse home loan and home credit
With the home loan you can access a loan aimed at improving the property with a renovation, a restoration, or the purchase of new furniture; for the purchase of a house it is always necessary to open a mortgage.
Do you need to have clear ideas on what type of loan to ask the bank?
Contact Maximo Merelli, the financial advisor in Balermo who helps you not only to ask for the right financing, but also to prepare and present the documentation to obtain the loan in the shortest possible time.