Mortgagee vs Mortgagor

Publication Date :

23 May, 2018

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Mortgagee vs Mortgagor Differences

A mortgagee is the lender or giver of the secured loan that pays the entire loan amount to the borrower in exchange for security or mortgage, who receives installment payments over the specified intervals of the loan period. In contrast, a mortgagor is an individual or an organization who acquires loan money mortgaging their assets and pays interest and fixed installment. Also, he decides the amount and tenure of the loan. It is important to note here that the assets' ownership remains with the mortgagee until the whole amount is repaid.

Mortgagee vs Mortgagor Differences

Mortgagee vs Mortgagor Infographics

Mortgagee vs Mortgagor Key Differences

Here, are the key differences between mortgagee and mortgagor: -

Mortgagee and mortgagor are related to the term ‘mortgage.’ A mortgage implies ‘collateral’ or a ‘real estate asset’ pledged to get a ‘secured loan’. The term ‘mortgagor’ means to the lender or institution engaged in the business of granting secured loans against borrowers’ property (acts as a guarantee) instead of specified interest over a fixed tenure. On the other hand, ‘mortgagee’ implies the borrower (both individual and an institution) who requires a secured loan and pledges their 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. In comparison, the receiver is termed as a mortgagor.
The principal amount is divided into fixed equal installments (as agreed by the ‘mortgagee’ and ‘mortgagor’) along with interest. The mortgagor repays the loan amount in equal installments, and the mortgagee becomes the receiver.
Before the agreement, the mortgagor has the right to know about the interest costs, settlement charges, tenure, etc. But, on the other hand, the mortgagee has to disclose all the facts to the mortgagor, and he is answerable to all the queries.
The mortgagor must present proper documentation of ownership of the assets before the ‘agreement.’ The right of the collateral changes from mortgager to mortgagee till the loan amount along with 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 can sell the collateral if the mortgagee fails to repay the installments. At the same time, the 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. In contrast, the mortgagee has the principal loan amount, which is lower than the collateral.

Mortgagee vs Mortgagor - Head-to-Head Differences

Here are the main differences between mortgagee and mortgagor: -

Basis	Mortgagee	Mortgagor
Meaning	‘Mortgagee’ denotes an individual or an institution associated with 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 an equal amount of installments primarily monthly or quarterly basis.	Pays equal amount on a monthly or quarterly basis.
Agreement	The mortgagee determines the terms of payment and the rate of interest.	The mortgagor decides the amount of the loan and the tenure.
Ownership	The ownership of assets remains with the mortgagee till the whole amount is repaid.	The borrowed amount remains with the mortgagor.
Documentation	The mortgagor should submit documents related to ownership of collateral to the mortgagee.	The loan amount received from the mortgagee should be well documented in receipt by the mortgagee.
Payment terms	The mortgagee generally accepts monthly or quarterly terms.	The mortgagor pays equal installments 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, the mortgagor has to accept the decisions made by the mortgagee.

Mortgagee vs Mortgagor - Conclusion

Mortgagee and mortgagor are an integral part of the loan business, which includes transferring funds to the required person/institution, pledging assets (cost of pledge assets is more than the loan amount) to the lender the receiver, expenses like settlement costs, interest costs, etc. First, the agreement is fixed within a certain period that both mortgagee and mortgagor agree. Then, the entire loan amount is paid within a set number of installments, and the mortgagee charges a certain amount of interest. The interest calculated can be of two types: a fixed interest rate and a variable interest rate.

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