What is a Mortgagor?
A mortgagor is a person or entity that borrows money to purchase a piece of real estate. Mortgagors can obtain loans from financial institutions or individual lenders and are often evaluated based on their credit history and the quality of collateral they post. In mortgage loans, the mortgagor is required to pledge the title of the property as collateral.
To obtain a mortgage, the mortgagor must file for an application, and provide his/her credit information and other relevant documents to the mortgagee. The mortgagee then assesses the profile and decides if the loan is approved and the terms of the mortgage. The mortgagor must repay the loan in installments determined by the mortgagee, along with the interest payments associated with the mortgage.
- A mortgagor is a person or entity that borrows money to purchase real estate.
- Mortgagors can obtain loans from financial institutions or individual lenders and are often evaluated based on their credit history and the quality of collateral they post.
- In mortgage loans, the mortgagor is required to pledge the title of the property as collateral.
Rights of the Mortgagor
The law governs the rights of mortgagors to protect them in the event of any unfair practices. Below is a list of some of the essential rights of mortgagors:
1. Right of redemption
The right of redemption allows the mortgagor to redeem the property under certain circumstances. An example is if the mortgagor pays the entire mortgage off on the due date and fulfills all obligations written in the contract.
At such a point, the mortgagor can ask the mortgagee to transfer all mortgage deeds and other documents relating to the mortgaged property, which are in the possession of the mortgagee. It will transfer ownership to the mortgagor. The right of redemption cannot be redeemed in part and must be an absolute transfer.
2. Transfer to a third party
Transfer to a third party allows the mortgagor to request the mortgagee to transfer the mortgaged property to a third party and retransfer to the mortgagor. It can only occur when the mortgagee is not in possession of the property, the right of retransfer is stated in the initial contract, and the right of redemption still holds.
3. Inspection and production of documents
Inspection and production of documents provide the mortgagor with the right of redemption to inspect and create copies of all documents (related to the mortgage) in possession of the mortgagee.
4. Additions to property
Additions to property allow the mortgagor to have rights of redemption on any additions or improvements to the property. For example, if the mortgagor builds a house on a land that was mortgaged, he/she has the right of redemption on both the land and the house.
Mortgagee vs. Mortgagor
In simple words, the mortgagee is the lender, whereas the mortgagor is the borrower. The mortgagor requires the secured loan and typically pledges his/her property as collateral to the mortgagee until the loan and associated interest payments are paid in full. The repayments are structured into installments as decided by both parties and include an element of interest.
The mortgagee decides the terms of financing and other associated clauses of the mortgage agreement. The mortgagor has the right to know about the terms prior to the agreement, and the mortgagee must disclose all facts before entering the agreement.
The mortgagor should provide proper documentation requested by the mortgagee to commence the deal. During the mortgage deal, the ownership of collateral transfers from the mortgagor to the mortgagee until the loan and interest payments are repaid.
The mortgagee has the right to sell the collateral in case the mortgagor is unable to make the repayments on time. In such a case, the mortgagor must accept the decision taken by the mortgagee and abide by it. Typically, the amount of collateral is higher than the actual loan amount to give protection to the mortgagee in case the borrower defaults.
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