What is a mortgage and how does it differ from a mortgage loan?

Last updated: July 2026

Many families sign a mortgage without being entirely clear about what they are signing, and that's where the misunderstandings begin. Understand What is a mortgage? It's simple when you separate it from the loan: the mortgage isn't the money the bank lends you, it's the collateral you provide on your home to secure that loan. They're two different things that are often mixed up in the same conversation, and confusing them completely changes what's at stake with your home.

We are Hepacom, the Hechos Para la Comunidad Foundation (NIT 900.841.914-1), and we work for decent housing in the southern Aburrá Valley. We support families taking the step of buying their first home, and this is one of the most frequently asked questions. So, let's explain it clearly: what a mortgage is, how it differs from a mortgage loan, how it's established in Colombia, and what happens to it when you finish paying it off.

What exactly is a mortgage?

A mortgage is a real right of guarantee A lien is placed on real estate—usually your house or apartment—to secure payment of a debt, most often a mortgage. Simply put, you tell the bank, "If I don't make the payments, this property will be used to cover the debt." The property is then subject to a registered lien, although you remain the owner and can continue to live there.

In Colombia, mortgages are regulated by the Civil Code (articles 2432 et seq.) and simply signing a document is not enough: for it to be legally valid, it must be formalized as a public deed before a notary and registered in the property's real estate registry folio at the Office of Public Instruments Registry, which is administered by the Superintendency of Notaries and Registry. That registration is what gives it strength against third parties.

What is the difference between a mortgage and a mortgage loan?

This is the most common misconception, and it's worth recording. mortgage loan is the loanThe money the bank lends you to buy something, which you repay in installments with interest over several years. The mortgage is the guarantee of that loan: the lien on your home as long as the debt remains. One is the money; the other is the collateral.

In other words, you can have a mortgage without a bank (for example, to secure another type of obligation) and, in theory, a loan without a mortgage (with other collateral). But in practice, when buying a home, they go hand in hand: the mortgage loan is issued alongside the mortgage on the house you're buying. If you want the details of the loan itself, we explain it in [link/section/etc.]. What is a mortgage loan? and in How mortgage loans work step by step.

How is a mortgage established in Colombia?

When you buy with a loan, the mortgage is established within the same purchase process. The process, broadly speaking, is as follows: the bank approves the loan and inspects the property; the public deed of sale with the mortgage in favor of the bank is signed at the notary's office; and then that deed is registered to be recorded in the property registry. Only when the registration is final does the bank disburse the funds.

This process involves costs that should be budgeted for from the beginning—notary fees, registration tax, and charity contributions—and that's why we detail them in our guide. home deed expenses. Knowing they exist prevents surprises precisely when you have the least margin for error.

What happens to the mortgage if you stop paying the loan?

Here's what the mortgage protects from the bank's perspective. If the borrower stops making payments, the bank can initiate foreclosure proceedings. mortgage foreclosure process before a judge so that the property can be auctioned off and the proceeds used to cover the debt. It's not an automatic or immediate seizure: it's a legal process with stages, notifications, and opportunities to catch up on payments. But it is the reason why a mortgage is taken seriously.

That's why we insist so much on buying with a cool head and a payment plan that truly fits your budget. Before signing, review your plan to buy your first home And understand how much debt you can take on without overwhelming the rest of your household expenses. The loan terms are monitored by the... Financial Superintendency of Colombia, which oversees the banks.

Prepared by Hepacom based on the Colombian Civil Code and the regulations of the Superintendency of Notaries and Registry and the Financial Superintendency. Last updated: July 2026.

Common mistakes when understanding what a mortgage is

• Believing that mortgage and credit are the same thing: A mortgage is the security on your house; a mortgage loan is the money you borrow. You sign both, but they're not the same.
• Thinking that the bank will take your house as soon as you fall behind on payments: Foreclosing on the property requires a legal process with several stages, not an immediate dispossession. Getting up to date on payments in time prevents it from happening.
• Forgetting to pay off the mortgage after finishing paying it off: The lien doesn't disappear on its own. If you don't cancel it in the registry, your house will still be listed as mortgaged even if you no longer owe anything.

How do you pay off or cancel a mortgage?

When you pay the final installment, the debt is extinguished, but the lien remains recorded on the property's registration until it is removed. The bank issues a mortgage cancellation letter or deed (release certificate), and with this document, the lien is removed at the Public Registry Office. Only then is your property free of all encumbrances, which is what you need if you ever want to sell it or use it as collateral again.

It's a step many families postpone, and it ends up costing them dearly when it comes time to sell. Our advice is simple: as soon as you finish paying, arrange for the mortgage to be released. This process completes the cycle of a purchase that began, precisely, with a clear understanding of what a mortgage is and what it means for you. decent housing in Colombia.

How Hepacom accompanies you

If you're about to buy and these terms confuse you, write to us at donaciones@hepacom.org or from contact us. We help you carefully read the loan terms, understand what you're signing, and identify any subsidies your family may be eligible for, all at no cost. We do this because owning a safe and secure home is the foundation of everything else. However, please note: the loan is provided by the bank, and the deed and registration procedures are handled by the notary and the Land Registry Office. Hepacom does not charge fees or manage payments or paperwork.

Frequently Asked Questions

What is a mortgage in simple terms?
It's the collateral you provide on your home to secure a loan. If you don't pay, that property is used to cover the debt. It's not the borrowed money itself, but the collateral for that money. You remain the owner and can continue living in the house as long as you make the payments.

Is a mortgage the same as a home loan?
No. A mortgage is the loan you take out from the bank; the mortgage is the security on the property that backs that loan. In a home purchase, they go together, but they are two different things with different effects.

When will my house be released from the mortgage?
When you pay off the entire debt and have the lien lifted at the Public Registry Office, with the bank's clearance certificate, your property will remain mortgaged until you complete this process, even if you no longer owe anything.

Last updated: July 2026. This is an informational guide; it is not legal or financial advice. The establishment, registration, and release of the mortgage are handled by the notary and the Public Registry Office; the loan is granted by the financial institution. Verify the terms and conditions through official channels before signing. Hepacom does not charge fees or manage payments or procedures.