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What Type of Mortgage do you Need?

A mortgage, also referred to as a mortgage loan, is a type of loan availed by a person who
purchases an immovable property as an act of raising funds to buy a property or raising funds using an existing property. Here, the property acts as a security for the loan. There are six types of mortgages in India. Read on to know what they are.

1. Simple Mortgage

In a simple mortgage, the ownership of the mortgaged property is not transferred from the mortgagor to the mortgagee. In the process of repaying the loan, if the mortgagor fails to do so, the mortgagee can sell the property and recover the loan amount from the sale.

2. Mortgage by Conditional Sale

When a person decides to take a mortgage on his immovable property as a security, the ownership of the property is not transferred, but the mortgagee, under certain conditions, can sell the property. This is called as mortgage by conditional sale. It means that the mortgagor has conditionally sold his property to the mortgagee. This conditional sale will become an absolute sale if the mortgagor fails to repay the loan. On the flip side, if the mortgagor repays the money on or before the due date, his property is completely recovered from the mortgagee and thus can’t be sold by anyone else. A mortgagee enjoys more benefit in this type of mortgage than a simple mortgage. In mortgage by conditional sale, the mortgagee can own the property entirely if the money is not repaid to him.

3. Usufructuary Mortgage

In this type of mortgage, apart from using the property as a security, the mortgagor also physically delivers the property to the possession of the mortgagee until the loan amount is repaid. So, only when the loan amount is repaid can the mortgagor get back his property. During this period, the mortgagee is entitled to collect the rent and other profits of the property.

4. English Mortgage

In this type of mortgage, the mortgagor must agree to surrender his property to the absolute possession of the mortgagee on the condition that if the mortgagor repays the loan amount on or before the due date, he can completely recover his property from the mortgagee.

5. Mortgage by Deposit of Title Deed (Equitable Mortgage)

In this type of mortgage, the mortgagor agrees to render the title document of the property to the mortgagee. This is done so as to create a security for the mortgagee in order to procure the loan amount. This type of mortgage is only valid in the cities of Chennai, Kolkata, and Mumbai, and any other town notified by the State Government through its official gazette.

6. Anomalous Mortgage

An anomalous mortgage is a type of mortgage which is not any of the mortgages discussed above. The main characteristic of this mortgage is that it includes simple mortgage and usufructuary mortgage by conditional sale.

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