Is 'Mortgage' just another name for a Home Loan?
No, it's actually a little more than that.
It has become common to use the terms "Mortgage" and "Home Loan" interchangeably, but it's useful to understand the differences.
How a Mortgage differs from a Home Loan
A loan is where someone lends you money to fund a purchase. There are two things that distinguish a Mortgage from a loan.
Firstly, a Mortgage is specifically used to finance the purchase of "real estate" - which means land, and any improvements to that land (e.g. houses, garages, sheds, etc).
The second thing that differentiates a Mortgage from a Home Loan is that the borrower gives the Lender a lien on the property as collateral for the loan.
This means that if the borrower doesn't meet their repayment obligations, the Lender has the right to sell the property to recover the money you owe. This process is known as foreclosure.
How to avoid foreclosure
Foreclosure is a costly process - financially and emotionally. So it's important that you borrow no more than you can comfortably repay. That's why you should only borrow through an MFAA member.
MFAA members have the experience to know what is an appropriate amount for you to borrow - and are ethically bound to try to ensure that you don't over-extend yourself financially. Talk to an MFAA member today - they are the Essentials of Borrowing
Want another Mortgage and Home Loan tip?
Fixed Rate or Variable Rate: which Mortgage is right for you? Check out Essential #04