What is Mortgage?

Everyone reading this and who are in the process of obtaining a property loan, have come across the words “mortgage deed”. So what is a mortgage deed? To understand a mortgage deed, we first need to understand the term “mortgage”. A Mortgage loan or a property loan can be defined as the transfer of interests in a specific property to secure the loan advanced or to be advanced in the future. In other words, when a person takes a property loan, he has to pledge some property in the form of security to the lender so that the lender has an assurance, that in case of any default in the repayment of the loan, they can recover dues from that particular property. 

Persons involved in Mortgage

The individual who mortgages his property against the loan is called “Mortgagor/Borrower.” While the individual/institution to whom the property is mortgaged is called “Mortgagee/Lender”.

What is a Mortgage Deed?

The instrument or legal document that enumerates various terms and conditions about the mortgage is contained in the “Mortgage Deed”. It provides the lender with interest and legal rights over a property. All the rights and interests that the borrower has over the property is pledged as collateral are consequently legalized in the Mortgage Deed. This in-turn protects the lender, in case of any default in payment of the loan, he can claim his legal rights over the said property.

Following are certain points of a mortgage deed to be kept in mind

  • There are, in general, 6 types of Mortgages which are
    • Simple Mortgage or Registered Mortgage
    • Mortgage By Deposit of Title Deeds
    • Mortgage by Conditional Sale
    • Usufructuary Mortgage
    • English Mortgage
    • Anomalous Mortgage
  • The registration of a Mortgage Deed is essential to have legal validity. It must be signed by the Borrower with at least two witnesses who also attest to the deed. Relevant Stamp Duty is to be paid compulsorily, otherwise, the deed is not enforceable. 

A mortgage deed is, in short, a document that contains all details concerning the loan given including the parties involved, details of the property kept as collateral, loan amount, interest rate, and more. The deed gives a thorough run-through with regards to the interest and title over the property. It helps in determining the rightful owner of the mortgaged property.

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