Lien vs Mortgage


In accounting parlance, a loan with secured assets is often associated with a lien or a mortgage. Both of these accounts are long term and payable in series of years. A borrower should have huge amounts of assets as collateral when negotiating for a loan. These loans have interests as part of the loan contract agreements which is an interest expense on the part of the borrower while interest income on the part of the lender.

Lien  Mortgage
Elaborate Is a claim on an asset which could be a property or machinery as fund collateral for payment of obligation –may also be  in the form of services to the other party Binding agreement between borrower and lender  with the former  allowed to borrow for the purchase of a house
Origin Anglo-French “loyen” bond, restraint Old French “mort” and ”gage”  meaning dead pledge
What type of property are involved? Any with monetary value Housing
Types ·         Maritime liens

·         Judgment liens

·         Mechanic’s liens

·         Attorney’s liens

·         Homeowner Association liens

·         Weed and demolition liens

·         Tax liens

·         Simple mortgage

·         English mortgage

·         Reverse mortgage

·         Usufructuary mortgage

The basic difference between the lien and mortgage is the collateral asset. In a lien, a borrower can attach his personal assets like car, valuable luxury jewelry, house, proceeds from the sale, or the like as a security for the loan. On the other hand, a mortgage is specific when it comes to the collateral asset. Usually, lands and building are often assured as collateral security for the loan. In the case of breach, the lender has the claim for the secured assets of the borrower.

Both of these loans are managed by a property management representative, bank, a lending company or the owner itself in negotiating the terms of the loan. As part of the financial statements, these loans are classified under non-current liabilities.


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