Different Types of Mortgages-A Comparison    

Mortgage is defined as transfer of 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 pecuniary liability. This definition of mortgage is as per section 58 of the Transfer of Property Act 1882. As seen in the article “Different Types of Mortgages and Bank Loans”, there are six types of mortgages. 

Different types of mortgages

Simple mortgage – Section 58(b) of the Transfer of Property Act 1882 defines Simple mortgage. In this type of mortgage, a mortgagor without delivering the possession of the property, binds himself personally to pay the mortgage money. The mortgagor agrees that in the event of his failure to pay the mortgage money, the mortgagee shall have a right to cause the property to be sold. 

Mortgage by conditional sale– Section 58 (c ) deals with mortgage by conditional sale. In this type of mortgage, the mortgagor ostensibly sells the mortgaged property on conditions that 
a.    On default of payment of mortgage money, the sale shall become absolute or
b.    On such payment being made, the sale shall become void or the buyer shall transfer the property to the seller. 

Usufructuary mortgage – Section 58 (d) covers various aspects related to usufructuary mortgage. In this mortgage, the mortgagor delivers the possession and authorizes the mortgagee to retain possession until payment of the mortgage money and to receive the rents and profits accruing from property or any part of such property to appropriate the same in lieu of interest or the mortgage money. 

English mortgage is covered under Section 58 (e). The mortgagor binds himself to repay the mortgage money on a certain date and transfer the mortgaged property absolutely to the mortgagee, but subject to the condition that mortgagee will re-transfer the property to the mortgagor upon payment of the mortgage money, as agreed.    

Equitable mortgage– This mortgage is defined under section 58 (f) of the Transfer of Property Act 1882. Here, the mortgagor delivers to the mortgagee, the documents of title to immovable property with intention to create a security thereon to secure a loan. The transaction is not to be reduced to writing. This facility is available only in centres known as notified places. Any centre can be declared as a notified centre by the state government by notification in the official gazette. Equitable mortgage is the most common method of security creation for bank loans. 

Anomalous mortgage – As per Section 58 (g) of  the Transfer of Property Act 1882, a mortgage that does not come under any of the above five types is classified as an anomalous mortgage. 

Among the different types of mortgages, simple mortgage and equitable mortgage are covered extensively in the article Simple Mortgage, Equitable Mortgage and Bank Loans. 

Comparison of different types of mortgages
 

Security Interest Registration & CERSAI