18 Dec

What is the difference between mortgage and loan?

The loan and the mortgage are both loans with which, against a more or less strong guarantee, it is possible to obtain liquidity from a financial institution to be repaid in installments.
So in both cases the applicant gets a sum of money which he must then return.
The amount, the duration of the loan and the installments are obviously agreed in the initial phase upon entering into the contract. But what is the difference between mortgage and loan? Let’s see together the peculiarities and the differences of these two types of credit financing.

What is the difference between mortgage and loan: reason for the request and amount

money cash

The first difference between mortgage and loan lies precisely in the reason for the request for financing:

– The mortgage is requested for a specific purpose, such as the purchase of a house or the renovation of the same
– The loan can be requested without a specific expense motivation and to obtain small amounts

So, mortgages are required to obtain high sums, such as the amount for the purchase of a property, instead loans can be requested to cope with small expenses, such as the purchase of a car or a trip. or a service such as renovation or home furnishings. Hence, loans can be unfinished, such as the assignment of a fifth of the salary or pension. But in addition to the purpose for which a loan is requested and the amount obtained, what are the other differences between a mortgage and a loan? Let’s see them together.

What is the difference between mortgage and loan: duration, guarantees, interest rate

What is the difference between mortgage and loan: duration, guarantees, interest rate

In addition to the reason for the request and the amount obtained, another important difference lies in the duration of the loan. In fact, for a mortgage the repayment times can also be 30 or 40 years (the periods are established independently by the single bank), while for a loan, the duration of an amortization plan can be a maximum of 10 years.
In addition, a further difference lies in the guarantees of access to financing: to request a mortgage it is necessary to present real guarantees, such as a mortgage, instead to obtain a loan it is sufficient to have a demonstrable income, which can be the salary or the pension. In fact, it is important for a mortgage: Having a good credit situation and therefore not being a bad payer.

Present the mortgage on the house as collateral

Present the mortgage on the house as collateral

This last guarantee is due to the fact that with the mortgage very high amounts can be obtained and therefore the creditor has the need to have solid guarantees in order to grant the loan. In fact, in some cases, in addition to the mortgage on the house, a guarantee is also required.
The interest rate is also a factor that distinguishes a mortgage from a loan. The mortgage has an interest rate that can be fixed or variable, while the loan has a fixed rate for its entire duration.
Finally, also the speed of disbursement represents a discriminating element between mortgage and loan, the latter in fact allows to obtain the capital in a few days and being a public deed, it does not require the intermediation of a notary (with consequent less expenses)

Let’s summarize the basic elements that differentiate the loan from the mortgage

money loan


– It generally has a short duration, maximum 10 years
– The sums requested are usually small and, apart from special cases, do not require a guarantee
– They do not benefit from tax relief because they aim to satisfy non-primary needs
– They do not need to declare the purpose for which cash is requested
– It has fast delivery times and does not require a notary intervention


– It has a medium – long duration, even 40 years
– Normally it provides for the loan of an important sum, so much so that the bank always requires collateral, such as a mortgage on the house
– Benefits from tax breaks
– It is always aimed at the purchase of a specific asset
– It has long delivery times and requires notary intervention