So let's talk a little bit about the difference between a personal loan and a home loan. Let’s start with what is a personal learn, basically, a personal loan is a flexible loan of credit, so they both printed facilities. When we’re talking about the personal learning we’re talking about a flexible line of credit and we’ll be talking about the home loan. We talk about a rather sixth type of credit line. And the reason why the personal loan is flexible is because the personal loan does not prescribe to you what and how you should use that money.
So when you go and apply for a personal load, the bank is not necessarily going to ask you. What is it that you’re going to do with that money? They are not really concerned with what you do with the money. Well, as if you look at a home loan just like a loan, because it's a fifth type of loan fixed to a specific asset, you actually have to do what you say. That money in actual effect, that money never comes into your bank account. It goes directly to whoever borrowing the money to. So let’s explain that a bit. If you loan and you take a personal loan of fifty, thousand rand is going to be deposited into your personal bank account account.
If you are applying for a whole loan, that amount of money is going to deposited into the attorney. So it’s never money that you will touch with your hands because it goes directly to the seller. That brings us to the second point of the difference between personal loan and a home loan with a personal loan, we say it is unsecured debt because that loan again is not attached to an asset. So, again, there's no answer that you have to put as collateral against that type of loan. When you go to the other side, a home, you purchasing an actual asset, your purchasing a home. So if anything happens and you can no longer pay for the specific loan, they will take that asset and sell it to recoup the amount or recover the amount that they advance to you.
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