Mortgage
in India
What is a Mortgage?
A mortgage is a type of loan you take by using your
property as security.
- The borrower
(you) promises to repay the money.
- The lender
(bank or financial institution) keeps the property as security.
- If you
don’t pay back, the lender can sell the property to recover the money.
In short: A mortgage
= Loan + Property as security.
Types of Mortgages in India
There are different kinds of mortgages under Indian law:
- Simple
Mortgage – You keep the property but agree that the lender can sell it
if you don’t repay.
- Mortgage
by Conditional Sale – The property is “sold” to the lender, but the
sale is cancelled once you repay.
- Usufructuary
Mortgage – You give the property to the lender, and they use the rent
or income from it to recover the loan.
- English
Mortgage – You transfer the property to the lender but get it back
after repayment.
- Mortgage
by Deposit of Title Deeds (Equitable Mortgage) – You simply hand over
your property documents to the bank. This is very common in cities.
- Anomalous
Mortgage – A mix of two or more types above.
Why Do People Take Mortgages?
For Borrowers (Homebuyers / Businesses):
- Get
quick access to large funds.
- Continue
living in or using the property.
- Lower
interest rates compared to personal loans.
For Lenders (Banks / Institutions):
- Safer
than unsecured loans because property is pledged.
- Can
legally sell property if the borrower defaults.
- Earn
steady interest income.
Legal Rules Around Mortgages in India
- Governed
by the Transfer of Property Act, 1882.
- A mortgage
deed (legal agreement) is required.
- Stamp
duty and registration charges apply (varies by state).
- If the
borrower fails to repay, banks can take action under the SARFAESI Act,
2002 to recover money.
Things to Check Before Taking a Mortgage
- Compare
interest rates (fixed vs floating).
- Look
at the loan tenure (longer tenure = smaller EMI but more interest).
- Check
for hidden charges like processing fees or penalties.
- Verify
that the property has a clear legal title.
- Borrow
only what you can comfortably repay.
FAQs About Mortgages in India
Q1. Is a mortgage the same as a home loan?
A home loan is a type of mortgage. All
home loans are mortgages, but not all mortgages are home loans.
Q2. Which type of mortgage is most common in India?
The mortgage by deposit of title
deeds (equitable mortgage) is the most common because it’s simple and
widely accepted by banks.
Q3. Can I sell a mortgaged property?
Yes, but only after repaying the loan or
getting the lender’s consent.
Q4. What happens if I fail to repay a mortgage?
The lender can take possession and sell
the property to recover the dues.
Conclusion
A mortgage is one of the easiest ways to arrange
funds for buying property or meeting financial needs in India. If you’re a
buyer, it gives you access to money while keeping your property in your name.
If you’re a lender, it provides security for repayment.
