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Have you already found a project of your dreams? Most likely, the question of payment will become the next one on your agenda. Nowadays, not so many people can afford to pay for their cozy nest or a car without borrowing the necessary amount of money. 

The options to find a way out of this challenge are often straightforward: a personal loan versus a mortgage. If you struggle to tell the difference, we have prepared an overview of the major requirements for both of them, so you could decide which option is the best choice for you.

When to Get a Mortgage? 

A mortgage is an installment loan that is specifically designed with a narrow focus on property and real estate. It is secured by the property itself and is valid as long as you pay your installments. In case of interruption, your property will be sold off to pay the balance. 

Because of the high security that a mortgage inevitably brings, its interest rates are quite low compared to the other types of loans. For the same reason, they also allow for a longer repayment period. 

However, the major disadvantage of choosing a mortgage is the iron requirement of a down payment, which varies from case to case and, on average, amounts to 20%. A loan, on the contrary, does not require a downpayment most of the time and allows for flexible installment requirements. In rare cases, the down payment for personal loans does not exceed 3%. 

When to Get a Personal Loan? 

The major disadvantage of choosing a mortgage is the iron requirement of a down payment, which varies from case to case and, on average, amounts to 20%.

Personal loans are typically unsecured and have higher interest rates than mortgages. This also means that they will have shorter repayment times and larger installments. You can apply for a personal loan to get whatever you like; there is no specific purpose requirement. 

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Usually, personal loans can be used for medical expenses, house renovations, and other purchases. They are faster and easier to get and are very quick to process because they require much fewer formalities on behalf of the applicant. 

Payday Depot is offering a list of requirements to get an installment loan that you might want to check out before you decide: 

• Age. In the USA, you must be over 18 years old to be eligible for a loan.

• Active Account. This account is used for repayment.

• Proof of Income. You must be earning enough to be able to cover the installments. 

• Contact Information. Address, phone number, and email.

Pros and Cons 

The pros of getting a mortgage rotate around a combination of low-interest rates, a longer repayment period, and cheaper installments. The cons of choosing this option are the very strict purpose that includes pretty much only the real estate, steeper eligibility conditions, bureaucratic formalities, and longer processing times. 

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The individual loan will be a great option if you’re looking for higher flexibility and quicker waiting periods, fewer conditions, and lower eligibility criteria. Also, if there is a need for an emergency loan, you can get it as quickly as the next day. What you’ll have to take into account is a higher interest rate for individual loans and a shorter repayment term that could be a major disadvantage for those applicants who are trying to loan long-term.