Updated: Oct 4, 2020

Under Section 58(a) of the Transfer of Property act, Mortgage is simply defined as a specific immovable property’s transfer of ownership to secure payment of funds against it in the form of credit, which is known as the MORTGAGE LOAN.

  • The transferor is called a Mortgagor,

  • The transferee a Mortgagee

  • The principal money and interest of which payment is secured for the time being are called the Mortgage Money/Mortgage Loan,

  • And the instrument (if any) by which the transfer is affected is called a Mortgage-deed.

Also Read: What is Balloon Payment Mortgage

As per Transfer of property Act, there are 6 Types of Mortgages in India:

1.Simple Mortgage

2.Usufructuary Mortgage

3.English Mortgage

4.Mortgage by Conditional sale

5.Mortgage by Title Deed Deposit

6.Anomalous Mortgage

In this article, we will discuss about the Simple Mortgage loan.

As per Section 58(b) of the Indian Transfer of Property Act, a Simple Mortgage is a transaction whereby ‘without delivering possession (ownership or occupancy) of the mortgaged property, the mortgagor/borrower binds himself personally to pay the loan and agrees, that in case of his/her failure to pay back the loan, the mortgagee/lender can sell the mortgaged property via decree/court order. The proceeds of the sale will be adjusted towards the payment of the mortgage loan availed by the borrower/mortgagor to mortgagee(lender).

In this system, the possession of property remains with the mortgagor (borrower).

A simple mortgage is created through a registered deed and hence it is also called registered mortgage.

Also Read: Reverse Mortgage Decoded.

Features of the Simple Mortgage.

  • The borrower has to incur such stamp duty and registration charges.

  • Simple mortgage is preferred over equitable mortgages in exceptional cases such as :

  1. Where the original title deeds are not available OR

  2. The mortgagor/borrower has already created a mortgage and a second mortgage has to be created in favour of the lender/mortgagee.

  • Mortgagor is personally liable (personal obligation) to the mortgagee for the liabilities.

  • Mortgagee gets a right to cause sale of the mortgaged property. This right to be exercised through a court of law.

  • Ownership is not transferred and possession not given to mortgagee

In the next article we will understand the Usufructuary Mortgage...Keep watching the space.

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