In this article, we’re going to be providing a Mortgagee definition, along with comparisons to other terms in the typical mortgage agreements.
We will also be comparing the role of mortgagee to lender (they aren’t exactly the same) while also answering common questions that we receive from our members.
This article is part of our series on banking basics, ranging from opening different types of bank accounts around the world to understanding how various aspects of the banking system operate.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Mortgagee Definition
- Mortgagee vs Mortgagor
- What Is the Difference Between a Lender and a Mortgagee?
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
Mortgagee Definition
Definition of mortgagee is: The party in a mortgage agreement that has legal rights of ownership over a property, held as collateral in case of default on the mortgage loan. In most cases, the mortgagee is also the lender of the mortgage to the borrower, a role that is commonly fulfilled by a financial institution.
Mortgagee vs Mortgagor
The main difference between mortgagee and mortgagor is that a mortgagee is the party that provides financing and holds the underlying property as collateral in a mortgage, while the mortgagor is the party requesting the financing in order to purchase the underlying property.
In a traditional mortgage agreement, the mortgagee is a local commercial bank and the mortgagor is an individual that approaches the bank to finance the purchase of a home.
Additionally, as we’ll discuss in the next section, while it is common for the mortgagee to both provide the financing and hold the property as collateral, this is not always the case. In fact, there are differences between the terms lender and mortgagee, which we will look at in detail now.
What Is the Difference Between a Lender and a Mortgagee?
The main difference between a lender and a mortgagee is that lender specifically refers to the party providing the financing in a mortgage while the mortgagee specifically refers to the party that holds the underlying property as collateral.
Not surprisingly, the lender and the mortgagee in a mortgage agreement are almost always the same entity or person. More often than not, it is a financial institution that specializes in providing mortgage financing to individuals and other entities.
Frequently Asked Questions
Below are a few of the most common questions we receive from people looking into the definition of a mortgagee. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
Who Is Considered the Mortgagee?
In a mortgage agreement, the party that is considered the mortgagee is the party that is providing the capital to purchase the property. The other party in a mortgage agreement is the mortgagor.
What Is an Example of a Mortgagee?
An example of a mortgagee is a financial institution like a bank, credit union, building society, mortgage provider, or private lender. That said, a mortgagee can be any individual or entity that provides financing to another party for the financing of a property through a mortgage. Importantly, the mortgagee holds the legal right to the property as collateral.
What Is the Best Definition of Mortgagee?
The best definition of a mortgagee is the lending party in a mortgage agreement. Not surprisingly, the mortgagee is usually a financial institution like a bank or specialist mortgage provider. Through the mortgage agreement, the mortgagee provides financing to another party for the purchase of a property. As a result of this initial capital commitment, the mortgage then has the legal rights to the property.
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