Difference Between Mortgage and Note

Mortgage vs Note

“Mortgage” and “note” are terms related to loans or borrowing. People who take loans should have to either sign a mortgage document or a note. Both of these terms signify an agreement between two individuals or between an individual and a financial institution. Both of these are legally binding. If the borrower does not repay the amount that has been borrowed, the lender can sue the borrower under the mortgage document or the note.

What is a note? It is a document that an individual signs promising to pay the other person or lender the sum that has been borrowed. “Note,” which is also called a promissory note, also contains details regarding the specified interest for the money borrowed and the mode and time of repayment.

What is a mortgage? It is a document that an individual signs with a lender by pledging the property against the money that is borrowed.

While a note is signed by individuals who just borrow money without pledging anything, a mortgage is signed by an individual by pledging some property. A mortgage is normally registered in a recording office whereas a note is not registered.

Notes are private and more personal as the payment is done to an individual. But mortgages are commercial as the payment is made to a financial institution or a bank. Mortgages generally involve a financial institution or a bank, but notes only involve individuals. A note outlines the total amount borrowed, interest on the money, and the mode of repayment. It may also contain an acceleration clause which means that the whole amount is automatically due after a payment is missed. Mortgages also outline the amount of money, interest rate, and mode of repayment.

Summary:

1.A note is a document that an individual signs promising to pay the other person or lender the sum that has been borrowed.
2.A mortgage is a document that an individual signs with a lender by pledging the property against the money that is borrowed.
3.While a note is signed by individuals who just borrow money without pledging anything, a mortgage is signed by an individual by pledging some property.
4.Notes are private and more personal as the payment is done to an individual. but mortgages are commercial as the payment is made to a financial institution or a bank.
5.A mortgage is normally registered in a recording office whereas a note is not registered.
6.Mortgages generally involve a financial institution or a bank, but notes only involve individuals.

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