What is Mortgage and Types of Mortgage

Definition of Mortgage

A mortgage is a transfer of an interest in specific immovable property for the purpose of securing the debt. Section 58 of the Transfer of Property Act, talks about it.

Elements of Mortgage

Three elements of a mortgage are:-
1. There must be a transfer of an interest.
2. There must be specific immovable property intended to be mortgaged.
3. The transfer must be made to secure the debt.

Bare Act PDFs

Parties in a Mortgage

There are two parties in a mortgage. They are:-
1. Mortgagor – is the person who transfers the interest and takes the loan.
2. Mortgagee – is the person who receives the interest and gives the loan.

Types of Mortgage

There are six types of mortgage. They are:-

  1. Simple Mortgage.
  2. Mortgage by Conditional Sale.
  3. Usufructuary Mortgage.
  4. English Mortgage.
  5. Mortgage by Deposit of Title Deeds.
  6. Anomalous Mortgage.

1. Simple Mortgage.

Where without delivering the possession of the mortgaged property, the mortgagor personally binds himself to repay the loan. To secure the loan, the mortgagor transfers to the mortgagee the right to have sold immovable property if he fails to pay.

2. Mortgage by Conditional Sale.

The elements of this mortgage are as follows-
I. The mortgagor must sell the immovable property.
II. On the repayment of money due under the mortgage on a certain date, the sale shall become void, or the mortgagee (buyer) shall re-transfer the property to the mortgagor (seller).
III. On default of payment on that date, the sale shall become absolute.

The mortgagor must sell the immovable property ostensibly; means that it appears to be a sale, but in reality, it’s not a sale.

Bare Act PDFs

3. Usufructuary Mortgage.

In this, the possession of the property is delivered to the mortgagee and authorises him to receive rents and profits accruing from the property until the principal amount is satisfied. Here, the mortgagor holds no personal liability in repaying the loan.

4. English Mortgage.

It is a transaction in which the mortgagor binds himself to repay the mortgage money on a certain date and transfers the possession to the mortgagee. But subject to that on the payment of the loan, the possession will be re-transferred by the mortgagee to the mortgagor.

The mortgaged property is transferred absolutely to the mortgagee.

5. Mortgage by Deposit of Title Deeds.

In England, a mortgage of this kind is called an equitable mortgage. In this mortgage, there is simply a deposit of document of title, and the loan is taken.

I. An intention that the deeds shall be the security for the debt.
II. Registration is not necessary for this mortgage.

6. Anomalous Mortgage.

It is a mortgage that is not mentioned anywhere. It means except for the five mortgages mentioned above, all the mortgages are anomalous. This method is not mentioned explicitly but is in practice in India.

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8 Comments

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    1. Author

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