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Mortgage versus home loan - do they mean the same thing?

Most people use the words ‘home loan’ and ‘mortgage’ interchangeably, but these terms refer to two separate things.

A home loan is the sum of money a lender gives you to purchase your chosen property. You then pay this money back to the lender over a number of years, along with interest on the loan calculated at either a variable (fluctuates with the market) or fixed (1 to 5 years) interest rate.

A mortgage is a legally binding agreement (contract) between you and the lender when you take out your home loan, which protects the lender if you default on your loan repayments. If you are in breach of the contract during the life of the loan, the mortgage gives the lender the right to take ownership of the secured property. The mortgage stays in force until you have paid off your home loan, after which the property becomes yours.

What’s the difference? In short, a home loan is a means of buying a home when you don’t have the money yourself, while a mortgage is a means of securing a loan and protecting the lender from breach of the home loan contract.

If you are planning on buying or refinancing a property, find out more about the different types of home loans available at Qantas Money Home Loans.

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