TYPES OF MORTGAGES

Mortgage

In today’s time, there are many ways in which credit can be taken and Loan is one of them which is being used widely. The mortgage is one way of lending money to someone regarding which they will keep their immovable property with you. Section 58 of the Transfer of Property Act, 1882 defines the mortgage and its different types.

As per section 58 of the Act, a mortgage is the transfer of an interest in a specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan. And it can be an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.

According to the definition the essentials of a mortgage are:

1. Transfer of an interest in specific immovable property.
2. Securing the payment of money by a loan.
3. It can be an existing or future debt.
4. And at last, the performance of an act which results in liability.

Mortgagor: The transferor is called the mortgagor.

Mortgagee: The transferee is called a mortgagee.

Mortgage money: The principal money and interest of which payment is secured for the time being are called the mortgage-money.

Mortgage deed: Therefore, the instrument (if any) by which the transfer is effected is called a mortgage-deed.

Types of Mortgages

1. Simple Mortgage

In a simple mortgage, at first, the mortgagor must have bound himself personally to repay the loan. And in the event of his having failed to repay to the mortgagee the right to have the specific immovable property sold. So, the possession of the mortgaged property is not delivered to the mortgagee.

2. Mortgage by conditional sale

In this kind of mortgage, the mortgagor apparently sells the mortgaged property on the conditions:

1. On default of payment of the mortgage money on a certain date, the sale shall become absolute.
2. Such payment is made and the sale shall become void.
3. However, on such payment being made the buyer shall transfer the property to the seller.

Therefore no such transaction shall be deemed to be a mortgage unless the condition is embodied in the document which affects the sale.

3. Usufructuary Mortgage

According to the usufructuary mortgage:

1. The possession of the property is delivered to the mortgagee.
2. The mortgagee is to retain the property until the payment of mortgage money is paid.
3. The mortgagee is to get rents and profits in lieu of the interest or principal or both.
4. No personal liability is incurred by the mortgagor.
5. The mortgagee cannot foreclose or sue for sale.
6. And lastly, No time limit can be fixed expressly during which the mortgage is to subsist.

4. English Mortgage

Where the mortgagor binds himself to repay the mortgage money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage.

5. Mortgage by Deposit of Title Deeds

This mortgage is also called the equitable mortgage. Under the definition under Section 58 (f) of Transfer of Property Act, 1882, the essential requisites of such a mortgage are:

1. Firstly, Debt should be there.
2. Secondly, Deposit of the title deed with the mortgagee.
3. And lastly, the deposit is with an intention that the said title deed shall be security for the debt.

6. Anomalous mortgage

A mortgage 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 meaning of this section is called an anomalous mortgage.