DIFFERENCESLegal

Difference between mortgage and charge with table

We explain the difference between mortgage and charge with table. Both the charge and the mortgage are different from each other, a charge being a guarantee of the payment owed and, if one does not pay, a charge comes into play. Considering that Mortgage is the transmission of a participation in a real estate.

Mortgage vs Charge

The difference between Mortgage and Charge is that the mortgage is the transfer of interest to the borrower by the lender on a fiduciary basis. The borrower agrees to repay the mortgage amount in due time. A charge is the use of an asset as collateral when the borrower defaults on payment. If the property is real, it becomes a mortgage, if the property is movable, it becomes a pledge. mortgage and charge

Comparison table between mortgage and charge

Comparison Fee Mortgage Parameter

Property applied to Charged to movable and immovable property Charged on real estate
Payment period Infinite pay period Fixed payment period
Originality- Training Created by the operation of the law Agreement and act between two parties
Responsibility No personal liability except in special cases with introduction of contract Personal liability is expected except when excluded by contract
Registry Requires registration under the law – Transfer of Property Act of 1882 Does not require registration except when created by an act of parties

What is a mortgage?

It is an agreement between two entities in which one gives a word of honor to the other for the transfer of real estate to the other and usually occurs between a borrower and a lender. It is primarily a transfer of interest from one party to another.

In this case, ownership of the property remains with the borrower and possession is transferred to the lender until such time as the borrower has completed the agreed payment price through the agreed payment option. mortgage and charge

If the payment is not made on time, the lender has the option to sell the property to recover its financial contribution.

Mortgages are subdivided into the following categories:

  1. Simple Mortgage – This can be easily distinguished from another mortgage mode by the presence of a personal conviction when the borrower defaults, the lender can sell the property to recoup the remaining amount and possession of the property will remain with the borrower.
  2. Usufructuary Mortgage – This is a type of mortgage in which, if the borrower (mortgagor) cannot pay due to some circumstances, they can rent the mortgage to a third party to receive the mortgage rent and can pay this rent to the lender. Payments can go to the lender or they can go through the mortgagor depending on the current agreement.
  3. Conditional Sale Mortgage – This is a sale mortgage with a very clear condition that there will be a transfer of the mortgage to the owner once the loan is repaid.
  4. English Mortgage – Like the condition mortgage sale, this mortgage plan gives a specific payment date for the property that will be transferred to the original owner once the mortgage loan is paid on the agreed fixed date.
  5. Equitable Mortgage – This type of mortgage provides security to the lender for the speaking possessions of all original title documents for the sole purpose and purpose of naming a new recipient, selling the property, or foreclosing in the event of a foreclosure problem. non-payment.
  6. Anomalous Mortgage – This is a mortgage that is not by chance any of the aforementioned mortgages IE is a mortgage that is not an Equitable Mortgage, Simple Mortgage, conditional sale mortgage or usufructuary mortgage

What is the charge?

It is an interest of the guarantee loans through a mortgage on the assets of the company. It is the creation of an economic right to the lender for security purposes to repay a loan.

There are two types of cargo mortgage and charge

  1. Fixed charge – These are the charges incurred on fixed assets or determine assets and include land and buildings.
  2. Floating charge – These are charges that are charged on assets that are considered uncertain example shares.

The key components of a position are:

  1. Terms of sale
  2. A clear explanation of what happens when there is a default in payment
  3. Reliefs to the shipper that must include the right of sale

The charges can be applied to both personal and real property, mortgages, pledge and mortgage

Main differences between mortgage and charge

  1. A fee can be paid for an infinite period while the mortgage is paid for a specific period and the property can be sold once one is unable to pay as agreed.
  2. Mortgages have an associated personal liability, except where it is excluded by a contract, while the charge has no personal liability, except when it is established in a contract.
  3. Mortgages are primarily the transfer of ownership of interests from one party to another in real estate, while the charge is just a form of collateral to secure a debt through pledge, mortgage, or even a mortgage.
  4. The lender cannot sell the property at charges, to recover the amount, while the property can be sold to someone else’s mortgages. mortgage and charge
  5. Charges do not require registration under the law, while mortgages do require registration under the Transfer of Property Act of 1882.
  6. While mortgage transfer interest, a fee is only used for the sole purpose of granting the right to receive payment for a particular property and does not operate as a transfer of an interest in the property.

Frequently Asked Questions (FAQ) About Mortgages and Fees

Is a mortgage a fixed charge?

It depends on whether the company takes out the mortgage on an outstanding asset or on a tangible asset. Assets outstanding generally include accounts receivable, inventory, etc., while tangible or fixed assets include a building or fixed property.

A mortgage on a building is a fixed charge. However, a floating charge can also become a fixed charge on crystallization. But this only happens when a company goes into liquidation.

Who has the deeds of a mortgaged property?

Deeds or legal documents establish who owns a particular property or land. It allows a lawyer to check whether the seller can sell a property or not. These deeds are the property of the owner of that property. mortgage and charge

However, if there is a mortgage on the land, these deeds or documents will be at your mortgage lender, photocopies of which can be requested at any time. It is also useful to know if there are mortgages on a property.

What are the 3 types of mortgages?

The three types of mortgages are: fixed-rate mortgages, adjustable-rate mortgages, and alternative mortgages. In fixed rate mortgages, a person knows how much they have to pay each month. In adjustable rate mortgages, the monthly mortgage payment rises and falls along with interest rates.

Alternative or combined mortgages change over time. They usually offer a low interest rate initially and then their interest rate depends on current market conditions.

How long does a charge last on a property?

The tenure of a property has a duration of 12 years. It is not possible to re-mortgage your home when a charge order is issued on it.

However, this charge order can be lifted with the approval of your creditor once you pay the debt in full.

Can I sell my home with a loading order?

The registration of the collection order is carried out in the HM Land Registry once it has been granted. It is possible to sell a home with a charge order, but only if one person pays the charge in full to the creditor. mortgage and charge

Final Thought

In the mortgage, the borrower is obliged to lose the mortgage if he does not pay it, this happens through a court order, the charge is only a way to demonstrate security to the lender to ensure that the amount borrowed is fully repaid.

The fee and mortgage are designed so that the lender has full insurance to protect them from a case where the borrower does not repay the amount loaned under the current agreement.

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