Glossary
Mortgagor
The mortgagor is the owner of the property who grants a mortgage over it to secure a loan. The mortgagor may be the borrower, or a third party who provides their property as security for someone else's borrowing, such as a parent or a related company.
An example
A company borrows to fund a project, and one of its directors offers their investment property as additional security. The director signs a mortgage as mortgagor even though the company is the borrower.
Why it matters
A mortgagor who is not the borrower still risks losing the property if the borrower defaults. Lenders usually require third-party mortgagors to obtain independent legal advice before signing, and a borrower should make sure every security provider understands the obligations.
Points to check
If you are providing your property as security for someone else's loan, get separate legal advice before signing, and make sure you understand that you could lose the property if the borrower defaults. Ask whether the mortgage secures only one loan or all future debts. Check whether you will receive copies of statements and notices so you know how the loan is performing.