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.
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.
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.
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.
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.
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.
The person creating the mortgage is called
the mortgager and the person in whose favor mortgage is created (Bank) is
called the mortgagee.
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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.
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.
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.
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 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.
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.
property continues to be in possession of the mortgagor.
Mortgagee
can exercise the right of foreclosure.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
