Is there a Difference between Mortgage and Home Loan in a place like Sydney? Let’s Find Out…
Sydney, Perth, Brisbane, Melbourne or any other city you name it, everywhere you can find people who are still confused or use interchangeably these two terms related to financial markets – Mortgage and Home Loans in Australia. Surprisingly, the two are not the same, instead, have completely different meanings but both words relate to the property one is planning to buy.
Let’s dust-off the dilemma and understand these two terms in the simplest way possible –
This is the term people usually get confused and does not understand its usage. For them, a mortgage is a loan received from a lender to purchase a property. In reality, mortgage is a form of security for a home loan taken for the property to be purchased. In this type of lending, the property is under your name, but if you as a mortgager breaches the home loan or mortgage contract, the lender have the right to sell your property, since it’s been held as the security towards the home loan.
Generally, lenders will try and work out a financial management plan to get you back on track of repayments, in case you fall behind. Only as the last resort, lenders will sell the property to recover their investments. On the other hand, once your home loan is paid off, the mortgage ceases and nullifies the contract to be under any security and the property is all yours. Thus, to avoid such hassles, people look for a reliable Mortgage Broker in Brisbane.
A home loan is a financial credit given to you by a financial lender to purchase a property. There are many different types of home loans available but people in Australia go with variable interest rate home loans, which means the rate of interest offered to the home loan varies according to the market conditions, generally, according to the Reserve Bank of Australia’s monthly cash rate announcement.
Variable home loan rates are quite popular because they offer lower rate of interest as compared to the fixed rate home loan and includes more flexible possibilities like an offset account, extra repayments and redraw facility.
In certain cases, people prefer the fixed rate home loan option, which means the interest rate will be fixed for a period of 1-10 years and this can help them to budget their repayments accordingly without any highs and lows of surprises. Moreover, financial lenders in Australia also offer the alternative of splitting home loan, which means a portion of your loan is fixed, whilst the remaining is variable.
If you are looking for experts like mortgage broker in Sydney, Perth, and Melbourne or in any other Australian city, contact Loans Direct.