There are three frequently-used Greek words in the New Testament which have a common root and convey the same sense, but are used in two different contexts with regard to Believers:

• hagios - A Greek adjective usually translated "holy" i.e. "holy temple" or "holy ghost/spirit." When referencing Believers, the noun "ones" is understood and not explicitly stated; in that case, it is usually translated "saints," conveying the same thought as "holy ones."
• hagiasmos - A Greek noun translated either as "holiness" or "sanctification."
• hagiazo - A Greek verb translated "sanctify" except for the Lord's prayer where it is translated "hallowed" and Revelation 22:11 where it is translated "let him be holy still."

In studying the New Testament, it is important to understand the that the thought to be conveyed here is the "separated" aspect of that which is being described. To set something apart for a specific purpose is to "sanctify" it. Once set apart, it becomes "holy." That finished state is "sanctification."

Now, here's where some get confused when they read the scripture. With regard to the Christian life, "sanctify" ("hagiazo") and "sanctification" ("hagiasmos") are used in two different contexts. Sometimes it refers to the state of Believers in that they are "set apart" to go to Heaven. That's sometimes referred to as "positional sanctification." Everyone who has received Jesus Christ as personal savior is "sanctified" to go to Heaven. However, sometimes "sanctify/sanctification" is used in the context of daily Christian living i.e. separating from the world in lifestyle and participation.

There is only one way to determine which aspect of sanctification is intended by the author of each New Testament passage of scripture - context.