A Mortgage – Secured or Unsecured Debt
Quite simple a mortgage is a secured debt but what is the difference between secured and unsecured debt?
Secured debt contains physical collateral for the loan which is being extended. Unsecured debt does not have any collateral. Types of secured debt include mortgages (house), auto loans and any other personal property loans. Unsecured loans are typically personal loans, student loans or even credit cards.
Typically, unsecured loans will carry higher interest rates due to the fact there is nothing they can repossess or take back. These types of loans are viewed as being riskier to the grantor.
As with any type of loan your credit report will be reviewed and your associated credit score will for the most part, determine what your interest rate will be. The lower your credit score, the higher your interest rate. Overall, secured loans carry lower interest rates than unsecured loans.