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How to Difference between a mortgage and a mortgage

According to the Transfer of Property Act, of 1882, a mortgage refers to the transfer of an interest in certain immovable property, for payment in advance by way of a loan, an existing or future loan, or the performance of an undertaking which may provide. The mortgagor transfers financial liability to another party, referred to as the transferee, in a liability accrual process. The lender loans money to the mortgagor, and the property serves as security for the loan.

Mortgagor and Borrower

Loans are classified as secured and unsecured loans. In the case of a mortgage, the lender or lending institution, such as a bank, takes security from the borrower or borrower to repay the loan, also known as the mortgagee. The lender calls this loan a secured loan because they hold the borrower’s property as collateral during the loan tenure. A home loan functions similarly, with the purchased property securing the loan. A borrower mainly refers to a person who takes a loan and is responsible for repaying the loan. In a mortgage, the mortgagor is the borrower who uses his land or any immovable property he owns to secure the loan.

mortgage rights

  • Right of Redemption: As per Section 60 of the Transfer of Property Act, the right of redemption entitles the mortgagor to terminate a mortgage agreement, transfer the mortgaged property to his name and regain possession of his property on delivery of possession.
  • Right to transfer the mortgaged property to a third party instead of re-transfer: This gives the mortgagor the right to request the mortgagor to assign the mortgage loan and transfer the property to a third party directed by him.
  • Right of inspection and production of documents: The mortgagee may, on notice, ask for the production of copies of the documents of the mortgaged property for inspection.
  • Right of accession: Right of accession refers to accession to a property. The mortgagor owns the property and has the right to access it. The mortgagor pays the cost for acquiring an inalienable access and thereby becomes entitled to use it.

Why is insurance important?

  • While in possession of the mortgaged property, the mortgagee cannot claim any improvements made by the mortgagor without an agreement to the contrary. When the homeowner redeems the mortgage, they become entitled to these improvements. The homeowner does not need to reimburse the lender for improvements made without prior consent and permission from the homeowner and a public authority unless they were necessary for protecting the property.
  • Right to Renewed Lease: If the lessor enters into a new lease agreement with the mortgagor for the mortgaged property during the mortgagor’s tenure, the mortgagor is entitled to the new lease’s benefits upon redemption. The mortgagor holds this right unless he has agreed to the contrary with the mortgagee.
  • Right to Lease: This right was introduced after an amendment to the Act, before which the mortgagor had no right to lease the mortgaged property. After rectification, the mortgagor is allowed to lease the mortgaged property, subject to certain legal conditions.

Significance of a mortgage deed

The mortgage binds the borrower through a legal document known as a mortgage deed, which is an essential requirement for obtaining a mortgage. This instrument facilitates the transfer of interest between parties.  Registration of a mortgage deed is important to ensure the validity of the document. (This version maintains the original meaning but shifts the focus from the conditions to the action required to fulfill them.)

The mortgagor must sign the document duly and have it attested by at least two witnesses.
One must pay stamp duty.
The mortgagor owns the property and has the right to access it.

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