Personal Loan vs Mortgage Loan
Sometimes some situations may occur when you need instant money for some personal needs. In these cases, banks are always there to help you. Nowadays besides banks, there are so many other non-banking financial organizations that are ready to provide a loan.
In this case, you have two options. Either you will go for a personal loan or you will go for a mortgage loan. A mortgage loan is also known as loan as a loan against property. Property can be your home, a piece of land or your commercial property.
Both personal loan and a mortgage loan give you the freedom to use the amount of loan to fulfill any of your personal need. Both kinds of the loan are available in all banks. There are some differences in personal loan and mortgage loan. Let us now discuss personal loan vs mortgage loan.
A Personal Loan
If we want to define a personal loan in simple words we can say that a personal loan is an unsecured loan that allows us to borrow money from banks at some rates of interest. These loans are called unsecured loan because they don’t need to pledge anything to the bank. It is based on your salary or your income and your credit history. You can use this amount of loan to fulfill any of your personal need.
A Mortgage Loan
This kind of loan is similar to a personal loan in a way because it also allows us to borrow money from banks at some rate of interest. And the customer is free to use it anywhere. But this loan is secured loan, unlike a personal loan. You pledge your property to the bank or the lender as a security and then you get a mortgage loan or a loan against property.
Personal Loan vs Mortgage Loan – Differences
Personal loan and mortgage loan are different in some way. Let us discuss the differences.
If we compare the processing time of a personal loan or a mortgage loan we find that a personal loan processes fast. The reason after this is in a personal loan you don’t pledge any of your property. It is given on the basis of your income and credit history.
If these are good you will get a personal loan within two days. But in the case of a mortgage loan, it is opposite because you have pledged your property to the bank, it is a loan against the property. So the bank needs the time to access the property. It can take 15 to 20 days.
Rate of Interest
A mortgage loan or a loan against property is always available at fewer rates of interest as compared to the personal loan. The reason behind that is a personal loan is an unsecured loan and a mortgage loan is a secured loan. Basically, a person who has a bad credit history and is unable to get a personal loan goes for a mortgage loan.
The time period to return a personal loan is short as compared to a mortgage loan. A personal loan can be for 5 years. On the other hand, mortgage loans are for a longer period of time.
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