Section 58(a) of the Transfer of Property Act, 1882 defines the mortgage as “A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced by way of loan, etc.”
Don’t be confused about pledge and Mortgage because both the terms are kind of similar. Only the difference between these is that under the pledge the movable property is given as security and immovable property is given as security under the mortgage.
Who is Mortgagor?
A mortgagor is a person who borrows the money from the person or any identity like banks by giving his immovable property as security. For example, X takes 5 lakh rupees from Y by giving his house as security. Here X is the mortgagor and the Y is mortgage and house is immovable property.
Who is Mortgagee?
A mortgagee is a person or an identity who gives the money to the borrower by taking his immovable property as security. For example, X takes 5 lakh rupees from Y by giving his house as security. Here X is the mortgagor and the Y is mortgage and house is immovable property.
Why mortgage is important?
Nowadays, the transfer of money to another person without any security is risky. Let’s try to understand this with an example, suppose Deepak borrow 5, 00,000 rupees from Vikas without giving any security and promise to give back the money on 10th day July. But on the 10th day July, the Deepak becomes insolvent, now the Vikas has no security given by Deepak. The Vikas has to file a suit, but if he had done mortgage with Deepak and taken his immovable property at the time of mortgage then he had the right to sell his immovable property.
Essentials of Mortgage
There are main three essentials of mortgage that should be fulfilled to make the mortgage. Let’s discuss the elements of the mortgage.
- Transfer of Interest
- immovable property
Transfer of Interest
The transfer of interest is important in the Mortgage, there must be the transfer of interest by the mortgagor to the mortgagee and the interest may be partial interest.
The property belonging to the mortgagor and the security should be immovable property. The property which is attached to the earth, land, benefits arises from the land, etc. comes under the immovable property.
The purpose of transfer of interest is must be for the security of debt.
Types of Mortgage
There are mainly six types of mortgage which are as below:
- Simple Mortgage
- Mortgage by Conditional sale
- Mortgage by deposit of title deed
- Usufructuary Mortgage
- English Mortgage
- Anomalous Mortgage
It is just an agreement between mortgagor and mortgagee. In the simple mortgage, the possession of the property is not given to the mortgagee but the mortgagor bound himself to repay the debt. He transfers the right to sell the immovable property to the mortgagee if he failed to repay the debt.
Mortgage by Conditional sale
In this type of mortgage, the mortgagor sets the condition in the agreement that if he will fail to repay the money in a specific period of time given under the agreement with the mutual consent of both the parties, the mortgagee will become the owner of the property after the expiry date.
Mortgage by deposit of title deed
It is generally used in the bank when we take the loan from the bank we deposit our deed of immovable property as security. There will be no right given to the bank like possession or etc.
In Usufructuary Mortgage, the possession of the immovable property is given to the mortgagee where the mortgagee can use the property for rents and profits. It means the mortgagor is not taking any personal liability on him.
The English mortgage and the conditional mortgage are not the same. There is the difference between both the terms that under the English mortgage, as soon as the mortgage deed is signed by both the parties, the mortgagee becomes the absolute owner of that property but a date will be fixed in the agreement that if the mortgagor repays the debt on the specified date, the property would be returned to the mortgagor again.
An anomalous mortgage is the mixture or two or more types of the mixture at the same time. For example, A took the loan of 10 lakhs from B and say A will pay 5 lakhs after one year, and for the other 5 lakhs, B can take the possession of the [property] and use other 5 lakhs as Unsufructuary Mortgage. This is the combination of Unsufructuary and simple mortgage.
All these are the types of Mortgage and we can use any of the modes to mortgage our property.