Home Loans vs Mortgages:
Understanding the Differences

Home loans, mortgages… These two terms are used so interchangeably that you’d be forgiven for assuming what most people do: That they are the same thing!

But, as one of the best mortgage brokers Perth-wide will know, there are actually some key differences between the two. While many of the terms and concepts can certainly be confusing, we’ll try to break down the difference as simply and succinctly as possible.

If you’d like to ask more questions about anything and everything home loans, mortgages or home loans as opposed to mortgages, reach out to the Loan Monster team today.

Is there really a difference between a home loan and a mortgage?

There is actually an important distinction between the terms home loan and mortgage. If you’re looking to purchase a new home and apply for a mortgage it would be good for you to understand what the differences actually are.

Admittedly, the differences are technical in many instances and for the most part common usage allows for the use of either term.

What is a home loan?

A home loan is a type of loan provided by a lender to finance the purchase of a property. Pretty simple right?

What is a mortgage?

A mortgage is a security interest that the lender takes in the property to ensure the repayment of the loan.

The term “security interest” just means the legal right a lender has over the property being purchased in the event that the borrower fails to repay the loan as and how agreed.

Home loan vs mortgage

Put side by side together and the difference boils down to this.

The home loan is the actual financial product that is used to buy the home and property. The mortgage is the legal agreement that gives the lender security of the home and property being purchased.

Understanding the differences

We can illustrate the difference by simplifying the purchasing of a house into a little story.

If Mr Person wants to buy a house over here but does not have the money to do so, he can go to The Bank to apply for a home loan. That approved loan will provide Mr Person with the money he needs to pay the purchase price of the property.

The Bank then takes a mortgage over the property. This mortgage is an agreement that if Mr Person does not pay back the loan in the way he agreed to, The Bank has the right to then come and repossess the property for itself.

To that effect, the home loan is the provision of the funding for buying the house. The agreement there will include the terms and conditions by which that loan is to be repaid. From the interest rate to fees and charges, and even repayment schedule, it’s all included in the home loan.

The mortgage is the legal agreement between both Mr Person and the Bank that if the home loan agreement is not upheld the bank can then exercise their right to take control and ownership of the property.

Where the rubber meets the road here would be in the event that the owner of a property wants to use that property as collateral for another loan. The bank may have a mortgage over the property without there even being a home loan in place.

Find the right mortgage broker in Perth

All this talk of home loans and mortgages is enough to make anyone confused. That’s exactly why our recommendation here at Loan Monster is to seek out the best mortgage brokers in Perth. That way you’ll be able to understand what you need to know about applying for and accessing the finance you need to purchase the home you want.

At Loan Monster, we’re more than just specialist mortgage brokers. We’re humans. We speak in clear, plain English so that our clients understand everything at every step of the way. Whether you’re interested in first home buyers finance or simply want to find out about your options for home loans, our team is here to help.

So, for all of the technical expertise without any of the techno mumbo jumbo, give Loan Monster a call today.


Are you looking to refinance? Want to buy your very first home? Need an investment property loan? We can take care of it all for you at Loan Monster. Get in touch with our team and let’s get started today.

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