Difference between Lien and Mortgage

Lien and mortgage are two terminologies that you come across quite often, as they are used in financial sector and they apply to just about everyone. Lien and mortgage are two different things, with different definitions.

Mortgage is actually a kind of lien as when you get a loan from a mortgage company or a lender, you have to back that loan with your property as lien.

By definition, lien is a claim the lender has against your property or other assets. Lien is a border term covering several types of loan, while mortgage is a type of loan attached only to real estate. We can say not every lien is mortgage loan, but a mortgage loan is a type of lien.


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    Lien is the right given to a lender by law to save his loan that he gives to a debtor. It can also be defined as a prerogative granted to certain creditors (such as garages or hotel for instance) to maintain a personal property used to fulfil their office. Most of the financial experts consider that a lien exists in favour of a creditor, as a thing belonging to the debtor can be granted to him if the debtor fails to make the payment or defaults. Financial experts also say that lien has a legal right to the property of a debtor because he promises to relinquish it before getting a loan.

    Lien can apply to several conditions as it is, by definition, a right to claim given to creditor or one of the persons in a contracting party. The most general is material aspect, meaning that whenever the claim has a direct relationship with the thing. For example, a claim relating to the maintenance or repair something.

    The second most important aspect is legal, as whenever the debt and power over a thing carry the same contract. For instance, the repair contract with an auto workshop has many complexities. In cases like this, there are both legal and physical connectivity, and the two qualifications are not exclusive. The distinction between legal and physical connectivity carries a significant effect: it is assumed that the hardware connectivity is binding on all, while connectivity is legal binding—only liable for the debt.

    Image courtesy: homeguides.sfgate.com

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    A mortgage is a security, that is to say, a right granted to a creditor of a property. When debtor (a borrower) fails to pay off the debt, the creditor has a claim over debtor’s property to secure his interest.

    Image courtesy: static.move.com

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