Who is Mortgagee in Canada?

A mortgagee is an organization that lends money to individuals to acquire real estate property.

While the term “mortgagee” is usually interchangeable with “lender,” the former denotes the lending institution’s special rights in the mortgage contract.

In exchange for financing, the mortgagee places a lien on the property, which provides them with the legal right to assume ownership of the property should the borrower default on the payments.

They can then sell the property and use the proceeds to satisfy the mortgage balance.

Various types of organizations can serve as a mortgagee.

They include traditional banks and credit unions like RBC and Servus Credit Union, subprime mortgage lenders like Equitable Bank and Home Trust, and individuals operating as private lenders.


Monoline lenders, like First National, are financial services firms that deal exclusively with mortgages and don’t offer chequing accounts, investment accounts or other financial services.

What does the Mortgagee do?

The mortgagee’s role is to loan funds to individuals seeking a mortgage to purchase or refinance a home.

Before issuing a mortgage to an applicant, the mortgagee evaluates various aspects of their financial situation to determine if they’re a suitable candidate.

From the mortgagee’s perspective, the primary concern is the risk of default.

As part of the assessment, the mortgagee examines the applicant’s credit history, income, and current debt obligations and uses the details to construct a risk profile.

Once complete, the mortgagee assigns the borrower an applicable interest rate and outlines the terms and conditions of the loan contract.

The borrower can negotiate with the mortgagee to secure a favourable rate and terms.

As part of the mortgage contract, the borrower’s property acts as collateral for the loan to protect the mortgagee against the risk of default.

This agreement remains in place for the duration of the mortgage contract or until the loan is fully paid.

Should the borrower fail to fulfill their payment obligations, the mortgagee can legally place the home in foreclosure and sell it to cover the remaining mortgage balance.

Key Insight

In some provinces, like Ontario, the mortgagee may choose to initiate a power of sale rather than a foreclosure should a borrower default, as it’s a speedier process and bypasses the judicial system.

Mortgagee vs Mortgagor

The mortgagee is not to be confused with the mortgagor, which is a term that refers to the individual or entity that borrows money to purchase real estate.

The former always acts as the lender, never the borrower.

The term “mortgagor” is routinely used in mortgage documents to substantiate the requirement for the borrower to pledge their home as collateral for the mortgage.

If an individual borrows money through an unsecured line of credit offered by their, they’d be called a borrower rather than a mortgagee since your home doesn’t secure the loan.

To obtain a mortgage, you, as the mortgagor, must apply and be approved by a lending institution.

Once you successfully secure financing, you must commit to making timely payments, consisting of principal and interest.

Mortgagee signing paper mortgage contract

Frequently Asked Questions

  • Is the mortgagee the buyer or seller?
  • Can a person be a mortgagee?
  • What does first mortgagee mean?
Mark Gregorski

Mark is passionate about educating people on how the financial markets work and providing tips to help them better manage their money. Mark holds a bachelor’s degree in finance from the Northern Alberta Institute of Technology and has more than a decade of experience as an accountant.

Outside of writing and finance, he enjoys playing poker, going to the gym, composing music, and learning about digital marketing.