Definition of Mortgage:-
A mortgage is a loan used to purchase a home.
Definition of Bond:-
A bond is a type of investment that pays the investor regular interest payments over a set period.
Mortgages and bonds both represent financial instruments. They differ in many key ways beyond what they do and who holds them. Mortgages can be taken out on a property that serves as a primary residence or a secondary home.
While bonds can only be taken out on certain types of commercial projects. Mortgages have a fixed rate for the life of the loan. While bonds offer variable interest rates that change over time. In some cases, this could mean that bonds hold greater potential. Upside beyond their initial value than mortgages do.
Mortgages allow individuals to borrow money in order to purchase property. I.E., A home, farmland, or commercial property. A bond is an investment that pays the investor regular interest payments over a set period. Until it matures when the total amount invested plus all accrued interest is returned back to the investor.
The main differences between mortgages and bonds are:
Mortgage can be taken out on any type of property. Which includes residential as well as commercial properties. While bonds can only be taken out on certain kinds of projects. Like Government or corporate ventures.
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Mortgage usually has a fixed rate for their lifetime, whereas bond offers variable interest rates that change over time. Bonds may have greater potential upside beyond their initial value than mortgages do.
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The mortgage is mainly used for residential purposes, while bonds can be used by individuals, firms, and even governments.
Finally, the most important difference between the two financial products is that mortgage payments are less than bond payments because of the lower risk involved. Mortgage pays lesser than bonds. Bond payments are usually more than mortgage since it has relatively higher risk factors attached to them. It also provides security back to the investor/buyer in terms of their principal amount along with interest accrued on it overtime a period.
