Difference between Home Loan and Mortgage. Sometimes, acquiring a home is only possible by seeking assistance from a bank. Funds can be provided by various means. Let’s examine this matter and find out the differences between a home loan and a mortgage.


A home loan is a transaction that does not necessarily involve the bank taking the real estate property as collateral.

A mortgage is a form of financing in which the purchased property remains under the ownership of the financing organization until the client’s debt is repaid.


There are quite a few criteria on which the two discussed transactions differ. The significant distinction between a home loan and a mortgage lies in what guarantees the bank’s money return in each case and whether the borrower becomes the full owner of the property.

A home loan usually requires guarantors. In this case, collateral might not be necessary, and the purchased apartment (house) fully becomes the property of the borrower. The bank does not have rights to these square meters. In case of non-payment of the debt, the bank can take various actions without affecting the property itself.

Meanwhile, the individual who has acquired such real estate is entitled to carry out any operations with it, such as exchange or donation. In a critical situation, the individual can sell this apartment on their own terms and settle with the credit organization.

At the same time, a mortgage is established with the condition that in case of default, the bank takes possession of the property for its realization, thereby recovering its money. The borrower can use the property as a roof over their head throughout the repayment period. However, the borrower does not have full authority over the real estate as it serves as collateral.

Let’s consider the differences between a home loan and a mortgage in terms of repayment periods and the size of monthly payments. In the first option, several years are given, on average seven, for repayment. Each payment is substantial. In contrast, a mortgage is established for a period of up to three decades. Here, a smaller amount has to be paid each month.

However, it’s important to consider that the overall overpayment in the latter case will be significant. Furthermore, in addition to mandatory mortgage payments, there’s also a cost for insuring the pledged property. But for many, a plus point is that in this option, the bank provides more funds than when applying for a home loan.