Most times people get stuck between deciding between Mortgage and Personal Loan. The Decision to apply for either of the loans can seem very easy. But the truth is it’s not that easy to choose between Mortgage and Personal loan.
The truth is Mortgage is a type of Personal Loan difference been its on a bigger and advance level. Someone can secure a Personal loan for the purpose of using it to buy a dream house. Personal loans are loans you take from a bank or loan institutions meant for personal use or expenses.
But buying a dream house and getting that dream home is also personal. The point is the ultimate goal of getting a Mortgage is closely related to that of getting a personal loan. Difference been the primary purpose, use of the loan and name attached to the loan.
THE DIFFERENCE BETWEEN MORTGAGE AND PERSONAL LOAN
The difference between Mortgage and Personal loan can be related to the difference between the number 1 and 10. While 10 might be bigger than 1 but they are both alphabets. Now keeping this in mind lets get some differences between these two types of loans.
1. Mortgage loans are primarily taken to buy a house for the family. Personal loans are meant to take care of pressing expenses, buy personal stuffs and other related emergencies.
2. The maximum amount of money available for Mortgage loan is huge while that of personal loan is relatively small. Some Mortgage loans have the maximum of $80,000(sometimes even more) while Personal loan are usually about $10,000.
3. Personal Loans have shorter payback time. This means that the loan tenor or term is shorter compare to that of Mortgage Loan. Mortgage loans allows borrowers to payback for a period of 10 years. Personal loan maximum payback time is 3-4 years.
4. Mostly top banks and giant loan and financial institutions offer Mortgage loan services. Personal loan are offered even by online platforms. We have put together a list of companies offering Personal Loan with ease.
5. Easy to get is the Personal Loan and it requires less documentation and official reports or statements. Unlike Personal loan, Mortgage Loans requires lots of paper work.
6. Interest associated with Mortgage loan is different from that of Personal Loan. It seems that Personal Loans have lower interest rates.
The differences above might make it seem that mortgage loans are far different from personal loans. But in my opinion just because 10 is bigger than 1 doesn’t change it from been a number.
The truth is Personal Loans and Mortgage are still a type of loan. Both can even be work together. For example you can secure a Mortgage and get that dream house of yours. Then secure a personal loan to buy household items. So you see its a win-win.
MORTGAGE AND PERSONAL LOAN WHICH IS BETTER
The relevance of Mortgage or Personal Loan depends on your situation. If you already have a nice house and all you need is household items then Mortgage is not a wise choice but Personal loan is better.
Mntrends have put together simple loan calculators to help you better understand your loan. CLICK HERE to use the general loan calculator. If you would like to use Mntrends Auto loan calculator then CLICK HERE. For the Mortgage Loan calculator CLICK HERE to use the simple calculator.
But then if you need a house then getting a Mortgage is a better option. Truth is you can’t get a personal loan that will be able to buy you a house.
For me getting a loan is a means for you to make living easier. But its also good you get the right type of loan by choosing the one that best suits your situation and time. Mortgage and Personal Loan are important and beneficial depending on the circumstances and reason of getting the loan.