Category: Advances

MORTGAGE AND ITS TYPES Introduction: Ø As per section 58 of transfer of property act mortgage is the transfer of interest in a specific immovable property for the purpose of securing an existing or future debt or for the performance of an engagement which may give rise to a pecuniary liability.in mortgage a property like land, house or a building is used as a guarantee to get a money through a loan. Ø A mortgage is the transfer of a right to immovable property for the security purpose of a loan amount. Ø A mortgage is used in an agreement between two parties i.e. a debtor one who takes a loan and the creditor who gives a loan. Ø If the debtor does not pay the loan amount a creditor take right on the mortgaged property. Ø A mortgage is a method which used to create a charge on property by contract. Ø The person creating the mortgage is called the mortgager and the person in whose favor mortgage is created (Bank) is called the mortgagee. mortgage Types of mortgage Registered mortgage: It is also called the legal mortgage. In this a mortgage deed is written and stamped as per stamp act of the concerned state. The deed is then executed in the presence of two witness. It is then registered with the registrar of assurances within 4 months of execution in terms of Indian registration act 1908. Simple Mortgage: In a simple mortgage, mortgagor makes a promise to himself to pay the mortgage money and agree that if he fails to pay a loan amount, a mortgagee will have right to sell the mortgaged property through the intervention of the court and cover the loan amount. Neither the possession nor the ownership of property is transferred to the mortgagee. Right of foreclosure cannot be exercised by the mortgagee. Mortgage by conditional sale: In a mortgage by conditional sale, there is some condition included in contract at the time of the agreement between the mortgagor and mortgagee. A condition may be like if, in case of default of payment of loan amount after a certain date, a sell become unavoidable or many more conditions. The property continues to be in possession of the mortgagor. Mortgagee can exercise the right of foreclosure. Usufructuary mortgage In a usufructuary mortgage, possession of the property is transferred to the mortgagee.The mortgagee is entitled to retain possession of the property and recover its dues from the income accruing from the property.Mortgagee does not have the right of foreclosure.Mortgagee has no right to sue the mortgagor in his personal capacity or file a suit for sale of mortgaged property. English mortgagee: In English mortgagee, a mortgagor makes a promise to pay the mortgage amount on a certain date and transfer ownership to the debtor with a provision that he has to re transfer the ownership once the payment is done by the mortgagor. Anomalous Mortgage The anomalous mortgage is the which is not a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage, an English mortgage or a mortgage by deposit of title deeds within the section 58 is called an anomalous mortgage. Equitable mortgage Ø In an equitable mortgage, a mortgagor gives original title deed to the bank with an aim to create security there on. Ø An equitable mortgage is created by depositing the original title deeds along with documents. In exceptional case an equitable mortgage can be created by certified copy of the title deed provided there is proof that original is lost or irretrievably lost. Ø In this, a mortgage has no need to be registered with sub-registrar. But in case of a limited company charge in respect of equitable mortgage under section 125 of the companies act, 1956 must be registered with registrar of companies. Ø The tile deed may be deposited by mortgagor or his agent. Ø Title deed can be a sale deed, partition deed, lease deed, gift deed, and deed of assignment. Ø Deposit of title deeds to be done at Mumbai Kolkata, Chennai or any other town notified by the state government. Ø Bank should not part with the title deed even for a short duration. Balloon Mortgages Ø Balloon mortgages are just for short term and it has fixed rate mortgage. Ø In balloon mortgage, a monthly payment is lower because of large payment at the end of a term. Ø A balloon payment is for the honest and qualified borrowers who have good credit history. Reverse mortgage Ø A reverse mortgage as the name suggests it works on reveres stream. It is mortgage loan in which a lender pays monthly installments to the borrower. Ø A reverse mortgage is helpful to the older people in their financial need. Priority of mortgage: The priority of mortgage is considered from the date of execution of mortgage deed (for registered mortgage) or from the date of creation of mortgage by deposit of title deeds. Right of redemption: Right of the mortgagor to get back his mortgaged property on repayment of the loan, is called the right of redemption. Limitation period of redemption suit is 30 years. Right of foreclosure: It is the right of the mortgage to deny the mortgagor of the property to exercise his right of redemption that is debarring the mortgagor forever to get back the mortgaged property is called as the right of foreclosure. This right is available to the mortgagee in case of mortgage by conditional sale and can be exercised through a court of law. Such suit is called suit of foreclosure and has limitation period of 30 years.

Category: Advances

Mortgage & it’s types

SARFAESI Act, 2002

Marginal Cost of Funds based Lending Rate (MCLR)

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