Types of Mortgages that are provided by the lenders in Housing Loan & what the rights of the Mortgagor & Mortgagee along with it what are the essentials of each type of mortgage.

1. PRESENTATION ON TYPES OF MORTGAGES IN HL
SECTOR AND THE RIGHTS OF THE LENDERS

2. • In french Law term it is referred as “Death Contract”.
•Meaning- The pledge ends(dies) when either the obligation is fulfilled or
the property is taken through foreclosure.
Death Contract ?
•A mortgage is a transfer of interest in specific immovable property for the
purpose of securing the payment of money advanced or to be advanced by
the way of loan, an existing or future debt , or the performance of an
engagement which may give rise to pecuniary liability.
Section 58(a) Of
Trasnfer of Property Act
MEANING OF MORTGAGE
Mortgagor
One who
Mortgages the
property
Mortgagee The transferee
Mortgage
deed
Instrument
used by the
parties involved
in such transfer

3. ESSENTIALS OF MORTGAGES
Transfer Of Interest
Specific Immovable property
- Immovable property must be strictly Specified
To secure the payment of loan

4. TYPES OF MORTGAGES
Kinds of
Mortgages
1. SIMPLE MORTGAGE
MORTGAGE BY CONDITIONAL
SALE
ENGLISH MORTGAGE
USUFRUCTUARY MORTGAGE
EQUITABLE MORTGAGE
ANOMOLOUS MORTGAGE

5. SIMPLE MORTGAGE
There must be transfer of specific immovable property.
The position of property is retained by the mortgagor.
As the position of the property is not given to the
mortgagee,mortgagor has right to usufruct e.g. Enjoyment of
property.
The title is not given to the mortgagee
The mortgagor binds himself not to pay mortgage money by
personal security.

6. MORTGAGE BY CONDITIONAL SALE
Mortgage by conditional sale is one where the mortgagor ostensibly
sellls the mortgaged property on the condition that-
On default of payment of the mortgaged money on a certain date the
sale shall become absolute, or,
On such payment being made the sale shall become void, or
No personal security and right to sale is given to the mortgagee

7. USUFRUCTUARY MORTGAGE
•Usufructuary mortgage is one where the mortgagor delivers or agrees deliver the posotion of the mortgaged property to the
mortgagee and authorises him
•To retain the position until payment of the mortgage money, to recieve the whole or any part of the rents and profits occruing
from the property,and
•To appropriate such rents or profits
•(i) In lieu of interest, or
•(ii) In payment of the mortgage money, or
•(iii) Partlt in lieu of interest and partly in lieu of the mortgage money.

8. ENGLISH MORTGAGE
The mortgagor makes a personal promise
to repay the mortgage money on a certain
day.
The property mortgaged is transferred to
the mortgage.
The mortgagee, is therefore, is entitled to
take possession of the property. He/she
may under certain circumstances sell the
mortgaged property w/o intervention of
court.
The transfer is subject to this condition
that the mortgagee will re-transfer the
property to the mortgagor upon making
the repayment of the mortgage money as
agreed.
CHARACTERSTICS OF
ENGLISH MORTGAGE

9. ANAMOLOUS MORTGAGE
Combination of two or
more mortgages
It may, therefore,
take various
forms depending
upon the custom,
local usage, or
contract.
A mortgage other
than any type of
mortgage
explained so far.

10. In an equitable mortgage, the owner has to transfer his title deed to the lender,
thereby creating a charge on the property.
The owner also orally confirms the intent of creating a charge on the property. An
equitable mortgage is also known as an implied or constructive mortgage. No legal
procedure is involved in an equitable mortgage, but it is considered mortgage in
the interest of justice (under equity).
The borrower obtains money from the bank/lender with an agreement that his
property, on which the equitable mortgage is created, will act as security for the
loan. The borrower has to submit his title deed to the lender as security for the
money borrowed.
EQUITABLE MORTGAGE
No formal, legal document is executed or registered in the records of the registrar, but it can be created at notified
places. Stamp duty and charges are comparatively low, relative to a registered mortgage.

11. In a registered mortgage, the borrower has to create a charge on
the property with the sub-registrar through a formal, written
process, as a proof of transfer of interest to the lender as security
for the loan. Registered mortgage is also known as 'Deed of Trust'
A registered mortgage meets all the necessary legal requirements
to create a mortgage or a charge. If the borrower repays the loan
according to the terms and conditions of the home loan
agreement, the title of the property is given back to the borrower.
The rights of the lender (as created during the legal process) will
stand null and void on the property. However, if the borrower fails
to fully repay the loan (i.e. interest plus the principal component),
the lender will have the right to take possession of the property.
REGISTERED MORTGAGE

12. Equitable Mortgage & Registered Mortgage
In an equitable mortgage, the owner has to transfer his title
deed to the lender, thereby creating a charge on the property.
The owner also orally confirms the intent of creating a charge on
the property. An equitable mortgage is also known as an implied
or constructive mortgage. No legal procedure is involved in
an equitable mortgage, but it is considered mortgage in the
interest of justice (under equity). The borrower obtains money
from the bank/lender with an agreement that his property, on
which the equitable mortgage is created, will act as security for
the loan.
The borrower has to submit his title deed to the lender as
security for the money borrowed.
In a registered mortgage, the borrower has to create a charge on
the property with the sub-registrar through a formal, written
process, as a proof of transfer of interest to the lender as security
for the loan. Registered mortgage is also known as 'Deed of
Trust'.
A registered mortgage meets all the necessary legal
requirements to create a mortgage or a charge. If the borrower
repays the loan according to the terms and conditions of the
home loan agreement, the title of the property is given back to
the borrower. The rights of the lender (as created during the
legal process) will stand null and void on the property. However,
if the borrower fails to fully repay the loan (i.e. interest plus the
principal component), the lender will have the right to take
possession of the property.

13. Upsides of equitable mortgage
An equitable mortgage is considered easy and economical. The stamp duty involved in an equitable
mortgage is much lower than what is paid in registered mortgage. In many states, stamp duty and
registration charges in equitable mortgages are as low as 0.1 per cent of the loan amount. In other
mortgages, stamp duty and registration charges have to be paid twice, at times. This means that
stamp duty and registration charges are paid when the mortgage/charge is created, and again when
the mortgage is closed, i.e. when the loan amount is fully repaid.
The borrower and the bank representative do not have to visit the sub-registrar's office and undergo
the process of registration/ release of the mortgage.
The original title deed is returned to you without any formal process when you completely repay your
debt to the bank.

14. Why is registered mortgage preferred ?
Despite the benefits that equitable mortgage has to offer both parties (i.e. borrower and the
lender), banks prefer registered mortgage because equitable mortgages lack records of the loan
on the property in the sub-registrar's office. In an equitable mortgage, only the lender and the
borrower are aware of the mortgage/charge created on the property/land.
This leaves the possibility of the property being sold to a third party without fully repaying the
loan. The new buyer/ party might not be aware of the mortgage (because there are no records,
and the mortgage is created by a mere exchange of words). So, banking institutions consider
equitable mortgage as misleading. Many instances of fraud were reported in the past by lenders
because the same property was used to get multiple loans as public records were lacking.

15. Charge
• A charge is a right created by any person including a company referred to as “the borrower” on its assets
and properties, present and future, in favour of a financial institution or a bank, referred to as “the lender”,
which has agreed to extend financial assistance. Section 2(16) of the Companies Act, 2014 defines charges
so as to mean an interest or lien created on the property or assets of a company or any of its undertakings
or both as security and includes a mortgage. The following are the essential features of the charge which
are as under: 1. There should be two parties to the transaction, the creator of the charge and the charge
holder. 2. The subject-matter of charge, which may be current or future assets and other properties of the
borrower. 3. The intention of the borrower to offer one or more of its specific assets or properties as
security for repayment of the borrowed money together with payment of interest at the agreed rate should
be manifested by an agreement entered into by him in favour of the lender, written or otherwise.
There is a clear distinction between a mortgage and a charge, the former being a transfer of an interest in
immoveable property as a security for the loan whereas the latter is not a transfer, though it is nonetheless
a security for the payment of an amount. A mortgage deed includes every instrument whereby for the
purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, one
person transfers, or creates in favour of another, a right over a specified property.

16. NEED FOR CREATING A CHARGE ON COMPANY’S
ASSETS
Almost all the large and small companies depend upon share capital and borrowed capital for financing their projects. Borrowed capital
may consist of funds raised by issuing debentures, which may be secured or unsecured, or by obtaining financial assistance from
financial institution or banks.
• The financial institutions/banks do not lend their monies unless they are sure that their funds are safe and they would be repaid as per
agreed repayment schedule along with payment of interest. In order to secure their loans they resort to creating right in the assets and
properties of the borrowing companies, which is known as a charge on assets. This is done by executing loan agreements,
hypothecation agreements, mortgage deeds and other similar documents, which the borrowing company is required to execute in
favour of the lending institutions/ banks etc.
• As a matter of convenience and practice, as and when more funds are required by companies, they approach the same
institutions/banks or certain new institutions/ banks and offer same assets as security for fresh loans. However, when the same assets
are charged for a second and subsequent times, a very important question arises as to priority in respect of the charges in favour of
different institutions. This situation is managed by securing consent of the earlier lending institutions to the creation of second and
subsequent charges on the same assets. With their consents, the charges of all the lending institutions ranks pari passu, i.e. on the
same footing.
• However, the earlier lending institution may not give its consent to the creation of second charge on the ground that the realisable
value of the asset charged in its favour is not adequate to cover its loan and as such it cannot share its right of charge with the lending
institutions which seek second and subsequent charges. The real question which alerts the lending institutions is how to ensure that the
assets being offered as security for their proposed loans are not already encumbered.

17. Simple
mortgage
• Right to sale on
execution of decree
against the
mortgagor
• Mortgagee has no
right of foreclosure.
Conditional
sale
• The mortgagor has
given the title and
possession to the
mortgagee and
hence mortgagee
gets the right to
usufruct the proprty.
• Mortgagee gets the
right to foreclose the
proprty.
Usufructuary
mortgage
• No title is given to
the mortgagee
• Mortgagee gets the
right to usufruct the
property.
• Mortgagor does not
give any personal
security a right to
sale a foreclosure to
the mortgages.
RIGHTS OF THE LENDER

18. English
mortgage
• Mortgagee is entitled to
take possession of the
propert. He/she may
under certain
circumstances sell the
mortgaged property. w/o
intervention of court.
Equitable
mortgage
• Mortgage can be enforced
by a suit for sale of
mortgaged property , by
process of law.
RIGHTS OF THE LENDER