Different forms of Mortgage

Different forms of Mortgage

A mortgage is a debt implement, secured by the collateral of particular real estate property, which the borrower is obliged to pay back with a predetermined set of payments. It is a loan in which property or real estate is used as collateral. Section 58 (Indian Gove Law) of the transfer of Property Act enumerates six kinds of mortgages.

Types of Mortgages –

(1) Simple Mortgage – In a Simple mortgage, the possession of the mortgaged property is not transferred from mortgagor to the mortgagee. If the mortgagor fails to repay the loan, the mortgagee has the right to sell the property and recover the loan from the sale amount.

(2) Mortgage by Conditional Sale – Under such Mortgage, the mortgagor apparently sells the property to the mortgagee on certain conditions –

  • On failure to repay the mortgage money before a certain date, the sale shall become absolute, or,
  • On condition that on such repayment of mortgage money the sale shall become invalid, or,
  • On condition that on such repayment the mortgagee shall retransfer the property.

In such case, the mortgagee is a “mortgagee by conditional sale”.

(3) Usufructuary Mortgage – In a usufructuary Mortgage, the possession of the mortgaged property is transferred to the mortgagee. The mortgagee receives the income from the property (rent, profit, interest, etc.) until the repayment of the loan. The title deeds remain with the owner.

(4) English Mortgage – In an English Mortgage –

  • The mortgagor binds himself to repay the borrowed money on a certain date.
  • The mortgagor transfers the property absolutely to the mortgagee.

But such transfer is subject to the condition that the mortgagee will retransfer the property repayment before the agreed date.

(5) Mortgage by deposit of title of deeds – in such mortgage, the mortgagor delivers the title document of the property to the mortgagee with an intention to create a security thereon.

(6) Anomalous Mortgage – In terms of this definition, an anomalous mortgage is one which does not fall under any one of the above live terms of mortgages. It can be affected according to the terms and conditions of the mortgagor and the mortgagee. Usually, it arises by a combination of two or more of the above mortgages.