The mortgagee is the legal term for the party that lends money in a mortgage agreement. In everyday language, this is simply the mortgage lender, such as a bank or building society. The mortgagee provides the funds to purchase (or refinance) the property and, in return, takes a legal charge over the property as security for the loan.
The mortgagee has certain rights under the mortgage agreement. If the borrower (the mortgagor) fails to make repayments, the mortgagee has the legal right to take possession of the property and sell it to recover the outstanding debt. However, repossession is always a last resort, and lenders are required by the FCA to treat borrowers fairly and explore alternative options first.
The term mortgagee can be confusing because it sounds like it should refer to the person receiving the mortgage (the borrower), but in fact it refers to the lender. The borrower is the mortgagor.
You take out a mortgage with a high street bank to buy your home. The bank is the mortgagee. They provide the loan funds and register a legal charge on your property. You are the mortgagor.
Key Points
- The legal term for the mortgage lender
- Provides the loan funds and holds a charge over the property
- Has the right to repossess if the borrower defaults (as a last resort)
- Can be a bank, building society, or specialist lender
- Often confused with mortgagor, which is the borrower