Definitions
- Referring to the act of lending money to someone or an organization. - Talking about the borrowed amount of money that needs to be repaid with interest. - Describing a financial agreement between a lender and a borrower.
- Referring to a type of loan used to purchase a property or real estate. - Talking about the legal agreement between a borrower and a lender for the purchase of a property. - Describing the process of obtaining a loan to buy a house or property.
List of Similarities
- 1Both involve borrowing money from a lender.
- 2Both require repayment of the borrowed amount with interest.
- 3Both involve a financial agreement between a borrower and a lender.
- 4Both can be used to finance large purchases such as a house or a car.
What is the difference?
- 1Purpose: Loan can be used for various purposes, while mortgage is specifically for purchasing a property.
- 2Collateral: Mortgage requires collateral, usually the property being purchased, while loan may or may not require collateral depending on the type of loan.
- 3Interest rate: Mortgage typically has a lower interest rate than other types of loans due to the collateral, while loan may have a higher interest rate.
- 4Repayment period: Mortgage has a longer repayment period than most other types of loans, while loan may have a shorter repayment period.
- 5Amount: Mortgage is usually a larger amount of money than other types of loans, while loan can vary in amount depending on the purpose and type of loan.
Remember this!
Loan and mortgage are both financial agreements between a borrower and a lender that involve borrowing money and repaying it with interest. However, the main difference between the two is their purpose and collateral. A loan can be used for various purposes and may or may not require collateral, while a mortgage is specifically for purchasing a property and requires the property as collateral.
