Trust Deeds and Mortgages: A Brief Comparison

Overview

Trust deeds and mortgages are comparable because in both the cases, property is held under a financial institution as collateral for a loan. You will find a good calculator for trust deeds if you run simple queries like “Scottish Trust Deed”. As for mortgages, there are multiple resources you can make use of.

The similarities

There are many similarities between a trust deed and a mortgage. In this section, we will talk about them in detail.

  • Both give the ownership of property to the bank (lender in the case of mortgages is also the bank or some financial institution).
  • Both work on the collateral system of loans.
  • Trust deeds and mortgages both have monthly (or some other duration based) payment plans.
  • You can use a trust deed calculator to calculate whether you qualify for a trust deed or not, what will be your repayment plans, and more. The same with mortgages.

Trust Deed Scotland

The differences

There are not many differences between the two, but whatever these differences are, they are pretty serious.

  • Direct write off of loan value is included in a trust deed. In a mortgage, the max you can do is write off the loan interest rate. And that too is weakly practiced.
  • In a trust deed, the ownership remains with the bank (just like a mortgage) but the property is released to the individual to resume production. That’s the point of the whole deed.
  • Truest deeds usually have three parties while mortgages are a two-party transaction. The three parties are the bank, the lender, and the individual.

Wrapping up

So that was it. Although mortgages and trust deeds are quite comparable, but they have a couple big distinguishing factors between them. The primary thing, however, is just the release of property under the trust.

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