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Is There A Difference Between A Home Loan And A Mortgage?

The answer must be yes and no, thanks in large part to the marketing departments of the high street lenders.

Home loan can indeed be used interchangeably with mortgage but only when the intention of the loan is to fund the purchase of property. The matter is muddied somewhat when ‘home loan’ is used to signify a secured loan, an advance borrowed against the value of a home.

Home loan then is not necessarily the same as a mortgage in the traditional ‘buying a house’ sense of the word. Interestingly, it does appear that home loan is now being applied more frequently to replace the terms, remortgage and second mortgage. Though both remortgage and second mortgage normally mean that the funds released are being used to fund the purchase of the property against which it’s secured rather than a loan to buy a yacht or round-the-world holiday. Home loan is really only the same as a mortgage when the funds are to buy a property over which the lender then has an interest.

A mortgage is almost exclusively taken out using the house as security. it is usually at a different rate than you would pay on a loan. A loan (for most people) is usually for a much lesser amount of money and would be repaid over a shorter period of time. If your friend is buying a house the chances are that it’s a mortgage they’ll be looking for.

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