Basically it can be said: A mortgage is a form of credit. The mortgage gives a lender greater security because the debt is related to an object. Not only the borrower is liable for the borrowed money, the lender also has the corresponding property (such as a home or land) as collateral. Even if this object is sold, the debt remains associated with it. Mortgage loans are often associated with lower interest rates thanks to the greater security for the lender.
Other loans are not linked to an object, but only to the income of a potential borrower. This is the case with consumer credit, for example. Particularly interesting are such offers for people who can not take out a mortgage, because they have no real estate, or because their property is already burdened with a mortgage.
Credit despite mortgage
Many believe that it is not possible to take out a loan if you have already taken out a mortgage. A mortgage loan, however, is by no means an impossibility. The aforementioned consumer credit, for example, is based solely on a secure income situation, ie a regulated income. A consumer loan is on this basis quite easy and fast to get. The conditions vary depending on the provider. However, one thing is certain: A loan despite a mortgage is not only granted in exceptional cases, but can be applied for in a straightforward manner.
Loans are a matter of trust
Those who have learned Latin at school may remember the word ‘credere’, from which the word credit derives. ‘Credere’ means to believe. This derivation points to an important aspect of the credit system: there is a relationship of trust between the lender and the borrower. The lender relies on the borrower repaying the borrowed money or returning the goods given to him after a certain period of time.