The housing issue is one of the most acute for the majority of Russians. When your own funds to buy a home are not enough, a mortgage or a home loan can help out. It is worth understanding the difference between these loans in order to choose the best option for yourself.
Differences between mortgages and home loans
Home loans and mortgages are quite similar concepts. In both cases, it is envisaged to allocate money to the borrower for the purchase of real estate. Moreover, in the case of a home loan, money can be spent exclusively on improving housing conditions. For example, for the purchase of housing in the secondary market, individual construction, housing reconstruction. Mortgage means the purchase of any real estate. These can be land plots, office buildings, and housing.
With both types of lending, the borrower must make an initial payment of 10% and prove his own solvency. The conditions under which loans are issued differ in different banks and depend on the type of real estate (housing in the secondary or primary market, housing under construction).
The principal differences between these two loans are the registration of collateral, as well as securing the ownership of housing. The mortgage provides for the pledge of the acquired real estate. Whereas with a home loan, you can mortgage other real estate. A home loan can be completely unsecured. But in this case, it will differ in less favorable interest rates for the borrower, as well as a limited amount of lending.
In case of mortgage lending, the owner of the acquired real estate until the debt is repaid is the bank, and in case of housing - directly the buyer. This is one of the advantages of a home loan. In an extreme situation, the apartment can be sold and settled with the bank. Moreover, you can sell real estate on your own terms. With a mortgage, the bank will directly dispose of the apartment and not all the money spent will be able to get back.
When is it worth getting a mortgage
A mortgage is a less profitable loan in terms of interest rates and the amount of overpayment. But at the same time, most borrowers opt for this particular type of lending. The main reasons are that mortgages have longer repayment periods, which can be up to 30 years. This makes the monthly payments less burdensome for the family budget. Also, a mortgage allows you to buy your own home for those who do not have a significant amount for the down payment.
In which case it is worthwhile to opt for a home loan
A home loan is more profitable for borrowers who have on hand most of the cost of housing - up to 70%. Such loans are seriously limited in terms of the amount and terms of its provision. But if the financial position of the borrower allows him to get a home loan, then, undoubtedly, it is worth stopping his choice on him. The overpayment in this case will be much lower.
