What is a mortgage ?

Ever wondered what is a mortgage ?

What are the different types of mortgages? 

What kind of rights you are giving to your bank over your property when you mortgage it ?

While mortgaging property, only legal rights are transferred to the mortgagee but not the possession. An instrument of mortgage deed is mandatory. On sale of a mortgaged property, the mortgage flows along with the property and the buyer of the property becomes liable

Types of Mortgage

1. Simple Mortgage
2. Mortgage by Conditional Sale
3. Usufructuary Mortgage
4. English Mortgage
5. Mortgage by deposit of title Deed
6. Anomalous mortgage
7. Mortgage by deposit of title deed

1. Simple Mortgage

A simple mortgage does not involve giving the possession of the mortgagor's property to the mortgagee. It is under mutual agreement that in case of non-payment by the mortgagee to the mortgagor within the specified time, the mortgagee can cause the mortgaged property to be sold in accordance with law and have the sale proceeds adjusted towards the payment of the mortgage money. The point to be noted is that the mortgagee cannot become owner of the property because he can only make the property to be brought for sale

2. Mortgage by conditional Sale

This type of mortgage entails the apparent sale of property by the mortgagor to the mortgagee. However  a condition is attached to the contract so that the sale shall become absolute and complete only on default by mortgagor. If the mortgagor repays his loan, the sale shall become null and void. This is in contrast to Simple mortgage where mortgagee only had the right to sell the property. Here the mortgagee has the right of title over the property from the beginning. Therefore he can take possession without having to wait for mortgagor to sell his  property to recover the sum.

3. Usufructuary Mortgage

This type of mortgage, by an express or implied term gives possession to the lender and gives him rights to accrue the rents or income coming from that property as repayment for interest and mortgage money till the time repayment is complete. Thus there is transfer of right to income and possession of property but not right to title. There is no time limit for payment of the mortgage money.

4. English Mortgage

The mortgagor transfers the mortgaged property to the mortgagee in entirety. Thus right to income and title both are transferred. However there is a condition that on complete repayment of the repayment money, he will re-transfer the property back to himself.

5. Reverse Mortgage

Reverse mortgage involves lending money to senior citizens against mortgage of their property (house) and there is no need of repaying the same. The loan is awarded as a lump sum amount or as monthly installments. In the event of death of the mortgagor, the property goes into the possession of the mortgagee.

6. Anomalous Mortgage

A mortgage that does not fall under the purview of any of the mortgage types is called an anomalous mortgage.

7.Mortgage by deposit of title deed 

Where a person in Kolkata, Chennai and Mumbai and in any other town which the State Government concerned may by notification in the official gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a “mortgage by deposit of title deeds.”