This is quite a misleading question as in one respect they are the same thing. A mortgage is just a very big loan however unlike most loans you’d take out from a bank or other lender this type of loan has a specific purpose. Mortgages can only be used to buy property such as a house or business quarters. They can’t be used to buy cars, holidays or any of the other significant items you might need a loan for.

There are a few other differences between mortgages and loans that are also worth mentioning here. The first is the length of time you get to repay the money you borrow. Loans, and especially personal loans, often have repayment terms of between five and ten years depending on the amount that is originally borrowed. Mortgages on the other hand are typically repaid over much longer periods of time and the average mortgage term is 25 years. This can be extended however and some lenders will consider terms of 30, 40 and even 50 years in extreme cases.

The second difference to mention is the method with which mortgages and loans are repaid. Mortgages have a range of repayment options – the main two being interest only and capital repayment. Interest only mortgages allow you to just pay the interest that accumulates on the loan each month without actually paying the loan itself back. At the end of the loan terms you then have to come up with the amount you originally borrowed and this is either done with an endowment policy or by selling the property. A capital repayment mortgage though works much more like a normal loan in that you pay a small amount off the loan each month and the interest as well. Then at the end of the loan terms you have nothing extra to pay.

Lastly, the interest rates on mortgages are normally much lower than on personal loans because your lender has your home or property as collateral. Introductory rates can be as low as two or three percent and even normal rates are no more than 6%. Personal loans though start from around 8% and they can be much higher than this which means you pay back more on your borrowings in the short term.

Other than these factors though there is no difference between mortgages and loans. Simply put a mortgage is a loan that is used to buy a property. You pay it back over longer terms than a personal loan and at a lower interest rate which makes it much better bet for buying a home.