Updated August 5, 2023
Difference Between Mortgagee vs Mortgagor
Mortgagee: A lending institution or banking that provides home financing for buyers can be defined as a mortgagee. In states and countries, mortgagees work with n number of borrowers yearly; their goal is to measure the level of financial risk associated with the potential mortgagor and then develop a lending package accordingly. Lending an organization’s interest is typically protected this way. Mortgagor: To finance a home purchase, a mortgagor is any person or individual who borrows money from a mortgagee. Mortgagors are typically working adults with a verifiable credit history per a regulated standard. To secure the most favorable lending terms possible from the mortgagee, they often pay up to 20 percent of the price of their home as a down payment. The payback period of the funds being borrowed is also chosen by the mortgagor.
Mortgagee vs Mortgagor Infographics
Below are the top 8 differences between Mortgagee and Mortgagor
Key Differences Between Mortgagee vs Mortgagor
Both Mortgagee vs Mortgagor are popular choices in the market; let us discuss some of the major differences:
- The transaction receiver is a Mortgagor, whereas Mortgagee in a loan deal refers to the ‘giver’ or ‘lender’.
- As the Mortgagee and Mortgagor agreed, the principal amount is divided into fixed equal installments along with interest. Mortgagor becomes the receiver, and Mortgagee generally repays the loan amount in equal installments.
- The Mortgagor has the right to know the interest costs, tenure, settlement charges, etc., before the agreement. At the same time, the Mortgagee is answerable to all the queries and has to disclose all the facts to the Mortgagor.
- Before the ‘agreement’, proper documentation must be presented by the Mortgagor of ownership of the assets. Till the Loan amount, along with interest, is fully paid, the owner of the collateral changes from Mortgager to Mortgagee.
- Till the loan is fully paid, including the interest amount, the Mortgagor pledges his collateral to the Mortgagee. On the other hand, the Mortgagee pays the entire loan amount to the Mortgagor.
- If the Mortgagor fails to repay the installments, the Mortgagee has the right to sell the collateral. Whereas the Mortgagor has to abide by the guidelines framed by the Mortgagee.
- Lower than the collateral, the Mortgagee holds the principal loan amount, whereas the collateral amount is generally higher than the loan amount; thus, the Mortgagee holds a higher amount of assets in currency terms.
Head To Head Comparisons Between Mortgagee vs Mortgagor
Below are the topmost comparisons between Mortgagee vs Mortgagor
|
Basis Of Comparison |
MORTGAGEE |
MORTGAGOR |
| Related to | The lender of the money | The borrower of the money |
| Meaning | Mortgagee denotes an institution or an individual associated with granting loans against collateral or security business. | On the other hand, an institution or a person that needs a loan is known as Mortgagor, along with fixed installments he/she pays interest for an agreed period and lends his assets as a security. |
| Calculations | Primarily on a monthly or quarterly basis receives an equal amount of installment. | On a monthly or quarterly basis
pays an equal amount. |
| Agreement | The mortgagee determines the rate of interest and terms of payment. | The mortgagor decides the tenure and amount of the loan. |
| Ownership | Till the whole amount is repaid, the ownership of the assets remains with the mortgagee. | The amount borrowed remains always with the mortgagor. |
| Documentation | Collateral documents should be submitted by the mortgagor to the mortgagee related to the ownership of the asset. | The mortgagee should document the loan amount received from the mortgagor in the form of a receipt. |
| Payment Terms | The Mortgagee generally accepts both Quarterly and Monthly terms. | Mortgagor makes equal installments (monthly or quarterly) as per the agreed terms. |
| Defaults | If the mortgagee does not receive the full amount from the mortgagor he/she has the authority to bid/sell its assets. | The mortgagor has to abide by the decisions laid down by the mortgagee in case of any defaults. |
Conclusion
Both Mortgagee and Mortgagor are integral parts of the loan business, which involve the pledging of assets to the lender by the borrower. They agree on costs such as settlement costs, transfer of funds to the required person/institution, and interest costs. The agreement is fixed for a certain period. Within a fixed number of installments, the entire loan amount is paid, along with a certain amount of interest charged by the Mortgagor. Fixed rate of interest and variable rate of interest are the two types of interest calculated.
In case, within the pre-decided time frame, the Mortgagor fails to repay the loan, to recover the due amount, the Mortgagee can charge a penalty, or he can bid his assets. Whether it is justified to bid on the assets? The question may arise now. The answer, in that case, could be that recovering the due amount in case of default makes sense, as the Mortgagee lends the entire amount in advance and takes the risk of the Mortgagor. By providing some undue advantage to the Mortgagee, the law of business states Business cannot bear losses, as the Mortgagee is engaged in a business.
Both Mortgagee vs Mortgagor terms is related to a mortgage which implies a real estate asset or collateral that is lent or pledged to get a secured loan in lieu of a fixed tenure and a specified interest rate.
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