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Can I get a loan to buy a house?
Put simply, yes - you can get a loan to buy a house, although you may not recognise it as a loan in the conventional sense. It’s incredibly rare that you’ll buy a house outright with cash, so most of us will take out a kind of loan to pay for part of it, but you’re probably more familiar with this loan being called a mortgage.
The main loan option
There’s a good reason why mortgages are the best and often the only option you can take when you’re looking to buy a house. In short, it’s the only line of credit you can take out to pay for a house purchase. The upper limit on most loans aren’t large enough to cover the cost of a house, and the ones that could be – like a homeowner loan – aren’t suitable because you need to own a property already to take one of these out.
Regardless of this though, mortgages are also one of the cheapest ways to borrow a large amount of money, so it makes sense to choose this option. Often, the interest rates charged on a mortgage will be much lower than that of a secured loan taken out over a similar period of time.
Of course, in rare cases taking out a mortgage might not be your only option. For those in a fortunate enough position to do so, there may family members or close friends willing and able to offer interest-free loans to help you buy your home. You should still think carefully about this though, as there’s a risk your relationship could be affected if you’re unable to pay the money back.
Can I buy a house with a different type of loan?
If you’re wondering if you can take out any other form of loan to pay for a house, you’ll most likely struggle. Although there are secured loans that may allow you to borrow as much as a mortgage, you can only take one of these out if you already own a home, as they are secured against your property. Even if you were to buy a second property, you would still be required to take out a second mortgage instead of any other form of lending. And, as we pointed out before, the rate of interest charged on a homeowner loan is far higher than that charged on a mortgage, which makes this a less economical option.
So, it really is the case that a mortgage is the best way to borrow when you’re looking to buy a home, and it’s unlikely you’ll be able to take out any other loan to pay for a house anyway.
If you’re wondering whether you can take out a loan to cover the cost of your home deposit, read our guide here.