Mortgagee vs Mortgagor

Mortgagee vs Mortgagor Differences

Mortgagee is the lender or giver of the secured loan that pays the entire loan amount to the borrower in exchange of security or mortgage, who receives installment payments over the specified intervals of the loan period, whereas Mortgagor is an individual or an organization who acquires a loan money mortgaging his or her personal Assets and pays interest as well as fixed installment, who decides the amount and tenure of the loan and it is important to note here that the ownership of the assets remains with the mortgagee till the whole amount is repaid.

Mortgagee vs Mortgagor

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Mortgagee vs Mortgagor Infographics

Mortgagee vs Mortgagor Infographics

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Mortgagee vs Mortgagor Key Differences

Here are the key differences between Mortgagee vs Mortgagor –        

  • Mortgagee and Mortgagor are both related to the term ‘Mortgage’. Mortgage implies ‘collateral’ or a ‘real estate asset’ pledged to get a ‘secured loanSecured LoanA secured loan is one where the borrower pledges his/her assets as a collateral to the issuer as a security. In the event of nonpayment of the loan, the issuer has the right to sell or transfer the secured property in order to recover the balance more’. The term ‘Mortgagor’ implies to the lender or institution engaged in the business of granting secured-loans against borrowers’ property (acts as a guarantee) in lieu of specified interest over a fixed tenure. On the other hand ‘Mortgagee’ implies to the borrower (both individual and an institution) who requires secured loan and pledges their own property to the Mortgagor till the loan is fully paid along with a fixed interest within a pre-decided time-frame
  • Mortgagee refers to the ‘giver’ or ‘lender’ in a loan-deal whereas the receiver is termed as Mortgagor.
  • The principal amount is divided into fixed equal installments (as agreed by the ‘Mortgagee’ and ‘Mortgagor’) along with an interest. Mortgagor repays the loan amount in an equal number of installments and Mortgagee becomes the receiver.
  • Before the agreement, the Mortgagor has the right to know about the interest costs, settlement charges, tenure, etc. On the other hand, the Mortgagee has to disclose all the facts to the Mortgagor and he is answerable to all the queries.
  • Proper documentation of ownership of the Assets is required to be presented by the Mortgagor before the ‘agreement’. The ownership of the collateral changes from Mortgager to Mortgagee till the Loan amount along with the interest is fully paid.
  • The Mortgagee pays the entire loan amount to the Mortgagor. On the other hand, the Mortgagor pledges his collateral to the Mortgagee till the loan is fully paid including the interest amount.
  • The Mortgagee has the right to sell the collateral in case the Mortgagee fails to repay the installments whereas Mortgagor has to abide by the guidelines framed by the Mortgagee.
  • The collateral amount is generally higher than the loan amount, thus the Mortgagee holds a higher amount of assets in currency terms whereas the Mortgagee holds the principal loan amount which is lower than the collateral.

Mortgagee vs Mortgagor – Head to Head Differences

Here are the main differences between Mortgagee vs Mortgagor –

The basis for Comparison between Mortgagee vs MortgagorMortgageeMortgagor
  • Meaning
‘Mortgagee’ denotes to an individual or an institution associated in the business of granting loans against a security or collateral‘Mortgagor’ is the institution or person who requires a loan, pledges his assets and pays an interest along with fixed installments for an agreed period.
  • Calculations
Receive the equal amount of installment primarily on a monthly or quarterly basis.Pays equal amount on a monthly or quarterly basis
  • Agreement
Terms of payment, the rate of interest is determined by the Mortgagee.The amount of loan and the tenure is decided by the Mortgagor.
  • Ownership
The ownership of assets remains with the Mortgagee till the whole amount is repaid.The borrowed amount remains with the Mortgagor.
  • Documentation
Documents related to ownership of collateral should be submitted by the Mortgagor to Mortgagee.Loan amount received from the Mortgagee should be well documented in the form of receipt by the Mortgagee
  • Payment terms
Monthly or Quarterly terms are generally accepted by the Mortgagee.

The mortgagor pays equal         installment in agreed terms (Monthly or Quarterly.)

  • Defaults
 The mortgagee has the authority to bid/sell its assets if he does not receive the full amount from the Mortgagor.In the case of defaults, Mortgagor has to accept the decisions made by the Mortgagee.

Mortgagee vs Mortgagor – Conclusion

Mortgagee and Mortgagor are the integral part of Loan Business which includes the transfer of funds to the required person/institution, pledging of assets (cost of pledge assets is more than the loan amount) to the lender by the receiver, costs like settlement costs, interest costs, etc. The agreement is fixed with a certain time period taken into consideration which is agreed by both mortgagee and mortgagor. The entire loan amount is paid within a fixed number of installments along with a certain amount of interest charged by the Mortgagee. The interest calculated can be of two types viz. fixed rate of interest and variable rate of interest.

If the Mortgagor fails to repay the loan within the pre-decided time frame, the Mortgagee can charge a penalty or he can bid his assets for sale to recover the due amount. Now the question may arise whether it is justified to bid the assets? One school of thought believes that as the Mortgagee lends the entire amount in advance and takes a risk of Mortgagor, so to recover the due amount in case of defaults make sense. As the Mortgagee is engaged in a business and the law of business states Business cannot bear losses by providing some undue advantage to the Mortgagor.

This has been a guide to the top differences between Mortgagee vs Mortgagor. Here we also discuss the Mortgagee and Mortgagor differences with examples, infographics, and comparison tables. You may also have a look at the following articles for gaining further knowledge –

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