| They are definitely not the same. They share some | | | | loans to establish the free equity. |
| characteristics, but they are not the same, so we | | | | Secured Loan |
| mustn't confuse them. It is surprising how simple it is to | | | | Being a secured loan, it has a very low risk for the |
| take a name for granted and believe it means | | | | lender, if any at all. The only loss would be the hassle |
| something it actually doesn't. In these lines we will state | | | | of repossession, should this be necessary, since every |
| the differences very clearly. | | | | other cost is covered by the product of the sales. This |
| It's Very Simple | | | | means that the amount of the loan is determined |
| A Mortgage loan is a loan granted to the borrower so | | | | taking these aspects into account. |
| that he or she can buy the property, using the house | | | | Growing Equity |
| that is purchased as collateral, or security towards the | | | | Let us suppose that a loan has been granted with a |
| repayment of the borrowed sum. The typical | | | | payback period of three years. After one year, there |
| borrowers are tenants who wish to purchase their first | | | | has been an important increase in the price, due to |
| home. It can also be the case of people who want to | | | | market circumstances. This means that you have |
| buy property when they already have their primary | | | | repaid one third of the loan, releasing the corresponding |
| residence and want to affect the purchase to | | | | equity, and also the total value of the property has |
| business or rent. | | | | increased in the year elapsed, adding even more |
| Homeowner Loans | | | | equity. Even if you used up all the equity at the time |
| A homeowner loan, on the other hand, is a loan | | | | you took the loan, after a year or two you will be able |
| granted to someone who is already a homeowner | | | | to use the same property to request a loan using the |
| and wishes to purchase an item other than real estate. | | | | new equity. |
| This is a secured loan, using the equity in the home to | | | | Some Benefits |
| back up the borrowed amount, obtaining similar interest | | | | Homeowner loans can give the borrower some |
| rates and conditions to a home equity loan or a | | | | additional benefits, such as payment vacation or |
| mortgage loan. | | | | prepayment, as well as the possibility of raising an |
| There is no definite interest rate for each type of loan | | | | important amount of cash in spite of having bad credit. |
| and these may fluctuate, depending on the area of the | | | | As examples of what one can do with this kind of |
| country and the nature of the loan, between 5 and 10 | | | | loan, we can mention buying a brand new car, paying |
| percent. The repayment plans are generally shorter | | | | for an important vacation or redecorating the house. In |
| than mortgages, and the fees are similar. There will be | | | | other words, we don't need to inform the lender what |
| an appraisal of the home to establish the value and | | | | use we will give to the loan, since it does not affect |
| discount any mortgages or other pending homeowner | | | | the outcome at all. |