Mortgage: A Short Note

What is a Mortgage

A mortgage is a legal agreement for securing a loan where a person uses an immovable property as collateral for the loan. According to section 58(a) of Transfer of Property Act,1882,“A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability”. The transferor is called a mortgagor, the transferee a mortgagee. Mortgage loan meaning is where the property or the real estate is used as collateral.

Mortgage meaning in simpler terms, it is a contract between a person and a bank usually, to receive a loan. The loan is used to buy a property in which the bank or the party, which lends money, has interest in the property. The interest in the property means that if the person fails to repay the loan on time according to their agreement, then the bank has the right to either sell the property for repayment of the loan or acquire the property and more.

An equitable mortgage is one in which the lender secures the mortgage by taking the original title documents.
The sections from 58(b) to 58(g) of Transfer of Property Act define the types of mortgage.

Types of Mortgage :

1. Simple mortgage: If the mortgagor fails to repay the loan, then the mortgagee has the right to sell the property (collateral) to repay the loan.
2. Mortgage by conditional sale: In this type of agreement, the mortgagor sells the property to the mortgagee under three different conditions. These are:
   a. If the mortgagor fails to pay the amount before the deadline, the sale becomes fulfilled.
   b. Or else if the mortgagor pays the amount before the deadline, the sale becomes void.
    c. And that if the mortgagor pays the loan before the deadline, then the property has to be transferred back to the mortgagor.
3. Usufructuary mortgage: The possession of the property is transferred from mortgagor to mortgagee in this type of mortgage. All profits made by the property by rent, etc. are collected towards the debt amount by the mortgagee. Once the amount has been repaid, the possession is transferred back to the original owner, the mortgagor.
4. English mortgage: The mortgagor transfers the property to the mortgagee and agrees to pay the amount by a certain date. If the amount is paid, the property is transferred back to the mortgagee.
5. Mortgage by deposit of title-deeds: The mortgagor transfers the title document of the property to the mortgagee as security until payment of debt is completed. This is valid in the towns of Calcutta, Madras, and Bombay, and in any other town, which the State Government concerned, may, by notification in the Official Gazette.
6. Anomalous mortgage: A mortgage, which is not of any previously defined type, falls in this category.