|
Most often people confuse the two terms though both, loans and mortgages are the same things.
Loan is temporary provision of money at interest, i.e. people borrow money from third party and pay it back with interest. Mortgage is a conditional transfer of any asset as security for the repayment of a loan.
Loan is obtained for term period that can be anything from 6 months to 10, 12 or even 25 years, while mortgage is long term loan for a fixed period of time usually 25 years.
Loan is paid back in monthly or quarterly instalments and it includes both the principal amount and the interest on the amount borrowed. Mortgages are typically taken for a longer period say to buy a house, raise funds for business, etc. Mortgages allow the borrower to make early repayments or even allow you to extend the repayment term.
Most of the loans fall in unsecured category that means you don't have to provide any security (asset like car, jewellery) as a guarantee, though sometimes if the loan amount is a big one, a collateral or security might just be needed. Legally speaking, mortgage is a deed that pledges the asset that you own as security for a loan. While taking a mortgage, you give the lender the rights to sell your asset if you default on making payments.
At times people often end up taking loan when they need a mortgage and vice versa. So if you have to borrow a large sum and are not able to pay it quickly out of your income, you will need to get a mortgage as the time frame for the amount borrowed is longer say for 25, 30 years. Loans are good if you want to borrow small amount of money over shorter periods. Also mortgages are cheaper in terms of interest rates than loans.
| 
