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What are the Different Kinds of Mortgages in India?

February 05, 2021

What are the Different Kinds of Mortgages in India?

A mortgage is a type of home loan in which the lender provides a property loan against the mortgage of the property itself. This gives them the right to acquire and sell the property if the borrower defaults on the repayment or violates the set terms and conditions otherwise.

But it does have different types of mortgage in it. And it is important to know what the types of mortgages are and what the actual meaning is.

This will help you make wise decisions and also to choose the right kind of mortgage.

There are six common types of mortgages in India:

1. Simple Mortgage

In this, the possession of the mortgaged property is not delivered to the mortgagee*. However, the mortgagor^ legally binds themselves to repay the mortgage money, in return for which the mortgagee agrees to have them the right to sell off the property to earn their money back in case they fail to repay.

Note: (* – the party which is granting a mortgage), (^ – the receiver of a mortgage)

2. English Mortgage

In this, the mortgagor agrees to repay the mortgage money by a certain date and then transfer the property to the mortgagee. The mortgagee, on the other hand, agrees to retransfer the property back to the mortgagor once they have paid the mortgage money as per the terms and conditions.

3. Usufructuary Mortgage

In this, the mortgagor grants the possession of the property to the mortgagee until the repayment of mortgage money and allows them to receive the profits earned from it (in the form of rent, etc.). In return, the mortgagee agrees to appropriate the same instead of interest or in payment of the mortgage-money.

4. Mortgage by Deposit of Title Deeds

In this mortgage, the mortgagee provides their documents of title to the immovable property to the mortgagor, with intent to create security on the same.

5. Mortgage by Conditional Sale

A mortgage by conditional sale is when the mortgagor sells the property to the mortgagee on the condition that the sale will become absolute if there is a default of repayment. Also, on the repayment of the money, the sale will become void and the mortgagee will transfer the property back to the mortgagor.

6. Anomalous Mortgage

A mortgage that doesn’t come under any of the above-mentioned mortgage types is an Anomalous Mortgage.

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