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 on a yearly basis, it is their goal to measure the level of financial risk that can be associated with the potential mortgagor and then accordingly develop a lending package. Lending an organization’s interest is typically protected this way. Mortgagor: In order to finance a home purchase a mortgagor is any person or individual who borrows money from a mortgagee. With a verifiable credit history as per a regulated standard, mortgagors are typically working adults and in order to secure the most favorable lending terms possible from the mortgagee, mortgagors 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 difference 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 difference between Mortgagee and Mortgagor:
- The receiver in transactions is termed as Mortgagor whereas Mortgagee in a loan-deal refers to the ‘giver’ or ‘lender’.
- As agreed by the Mortgagee and Mortgagor the principal amount is divided into fixed equal installments along with an interest. Mortgagor becomes the receiver, and Mortgagee generally repays the loan amount in an equal number of installments.
- The Mortgagor has the right to know about the interest costs, tenure, and settlement charges etc. before the agreement, while the Mortgagee is answerable to all the queries and has to disclose all the facts to the Mortgagor.
- Before the ‘agreement’ proper documentation, is required to be presented by the Mortgagor, of ownership of the assets. Till the Loan amount along with the 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.
- In case 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 is the topmost comparisons between Mortgagee vs Mortgagor
|
Basis Of Comparison Between Mortgagee vs Mortgagor |
MORTGAGEE |
MORTGAGOR |
| Related to | The lender of the money | The borrower of the money |
| Meaning | Mortgagee denotes to an institution or an individual associated in granting loans against collateral or a security’s 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 an interest for an agreed period and lends his assets as a security. |
| Calculations | Primarily on monthly or quarterly basis receives an equal amount of installment. | On a monthly or quarterly basis pays an equal amount. |
| Agreement | The rate of interest and terms of payment is determined by the mortgagee. | The tenure and amount of loan are decided by is decided by the mortgagor. |
| 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 mortgagee related to the ownership of the asset. | Loan amount should be well documented by the mortgagee in the form of receipt received from the mortgagor. |
| Payment Terms | Quarterly or Monthly terms are both generally accepted by the Mortgagee. | Mortgagor makes equal installments in (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. | Mortgagor has to abide by the decisions laid down by the mortgagee in case of any defaults. |
Mortgagee vs Mortgagor – Final Thoughts
While both Mortgagee vs Mortgagor is an integral part of loan business which includes pledging of assets to the lender by the receiver, costs like settlement costs, the transfer of funds to the required person/institution interest costs etc. Agreed by both Mortgagee vs Mortgagor, the agreement is fixed with a certain time period taken into consideration. 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 the assets? The question may arise now. The answer, in that case, could be that to recover the due amount in case of defaults makes sense, which as the Mortgagee lends the entire amount in advance and takes a risk of 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 are related to a mortgage which implies a real estate asset or collateral which is lend or pledged to get a secured loan in lieu of a fixed tenure and a specified interest rate.
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