When we speak of home loans and mortgages, we often use the term interchangeably. This is fine since they pretty much mean the same thing anyway. However, once you dig in deeper into what they mean, you will realise that there are also subtle differences between them.
Of course, knowing the difference between the two may not mean much to regular home buyers. However, if you really wish to have a greater understanding of how home loans and mortgages work, the knowledge would definitely come in handy. And that's what this article is about. Ready? Read on.
Both terms refer to money that you borrow from a lender. However, a mortgage is more specific since it refers to the money borrowed for the purpose of buying a property. It doesn't matter if you're buying your first house or one for investment purposes--if you borrow money from a lender, you get a mortgage from them.
Another thing that differentiates a mortgage from regular loans is that the property itself becomes the collateral when you get a loan. What it means is that the lender (which could be a bank or a non-bank entity) has the right to take away the property from you and then sell it off in the event that you become unable to make the repayments. That's when a property is said to be foreclosed.
A foreclosure can be a tragic and a traumatic experience for any property owner, especially if what's being taken away is their own home. You have already spent a lot of money on it, and have likely raised your family there, which makes the experience even more unfortunate.
You can prevent foreclosures, however. What you need to do is make the right decisions when acquiring a property. It begins with choosing the right home loan or mortgage for you. You need one that offers manageable repayments, so you could be faithful to your obligations and keep your home. Also, it helps to monitor your budget regularly. If you are making unnecessary purchases, put the money instead on your repayments, which could help you pay off your loan sooner.
Then there are the qualified advisors at Rate Detective. They will help you find the right home loan for you by looking into your needs and budget, and then provide you with rate comparisons of Australia's top lenders. With their advice, you will be able to find a loan that truly fits your needs.