Legal Definitions - Mortgagor

A mortgagor is the individual or entity who borrows money from a lender and offers their property as security for that loan. In simpler terms, if you take out a loan, typically to purchase real estate, and pledge your home or land as collateral to guarantee repayment, you are the mortgagor. You are granting a mortgage to the lender, who is known as the mortgagee.

Here are a few examples to illustrate this concept:

• Example 1: First-Time Homebuyer

  Sarah and Tom decide to buy their first house. They don't have enough cash to pay for it outright, so they apply for a loan from a bank. The bank agrees to lend them the money, but requires the house itself to serve as collateral. Sarah and Tom sign a mortgage agreement, promising to repay the loan and allowing the bank to take possession of the house if they fail to do so. In this scenario, Sarah and Tom are the mortgagors because they are borrowing the money and pledging their new home as security.

• Example 2: Refinancing an Existing Property

  Years after purchasing his home, David decides to refinance his mortgage to get a lower interest rate. He applies for a new loan from a different financial institution. This new lender pays off David's original mortgage, and David enters into a new agreement, again using his home as collateral for the new loan. Here, David is the mortgagor in the new refinancing transaction, as he is the borrower offering his property as security for the updated loan terms.

• Example 3: Commercial Property Acquisition

  A small manufacturing company, "Innovate Corp.," wants to expand its operations by purchasing a larger warehouse. Innovate Corp. secures a loan from a commercial bank to finance the purchase. As part of the loan agreement, Innovate Corp. pledges the new warehouse property as collateral to the bank. In this case, Innovate Corp. is the mortgagor because it is the entity borrowing funds and providing its commercial property as security for the loan.