For anyone considering securing a loan against a property, mortgage selection is a vital aspect. Awareness of the various options available equips you with the knowledge to select the best option that aligns with your financial situation and desired goals. This article will focus on different types of mortgages and their characteristics to make the best choice easier.
Simple Mortgage
In a simple mortgage, one mortgages their property while remaining in possession. If you default, the mortgagee has the right to sell the property to recover the amount. It is simple to implement and gives the mortgagor the liberty to use the property while creating a lien against it.
Mortgage by Conditional Sale
In a mortgage by conditional sale, the property is sold to a mortgagee but with a certain condition. In cases where the mortgagor fails to pay, the sale becomes an absolute one, and the mortgagee remains the owner. On the other hand, the mortgagee gives back the property to the mortgagor upon redemption. This also includes the rule of a definite period.
Usufructuary Mortgage
Of all types of loans, a usufructuary is the one where the mortgagor receives the greatest benefits. In this type, the mortgagor delivers the property to the mortgagee. The mortgagee uses the property to derive rents from it and adjust the rentals. The mortgagor receives the property when the mortgage money is discharged. It benefits the mortgagor since they can earn rent from the mortgage.
English Mortgage
An English mortgage involves the debtor selling the property to the creditor with a redemption clause. In this clause, the creditor will hand over the property once the debtor discharges the mortgage money. It includes the personal covenant since the mortgagor was liable irrespective of the property’s existence.
Mortgage by Deposit of Title Deeds
This mortgage is also known as an equitable mortgage. It is created by depositing the property deeds, with or without written documentation. These deposited deeds are kept in safe custody. It is one of seven kinds of mortgages in India. In infallible mortgages, the validity of documents is directly evidenced. However, in an equitable mortgage, the primary security is the deposited property deeds. Secondly, it can be earmarked as a quick and inexpensive mortgage, and finally, in actuality, the dealing with the deed is similar to real property.
Anomalous Mortgage
An anomalous mortgage is characterised by the fact that it does not fall under any of the previous six categories. Let us understand the nature of anomalous mortgages with the help of examples. For example, the mortgagor is transferring the interest for their property to receive a fresh loan.
Loan Against Property Without Income Proof
There are loans that lenders grant to loan against property without income proof. Most of this type of loan is given to property owners whose source of income is not from formal employment. However, the types of mortgage options available can still depend on the lender. Nonetheless, you can still get one which will meet your needs if you are a freelancer, self-employed, or an individual who receives money on an irregular basis.
Conclusion
Understanding the different types of mortgage options can help you make an informed decision when securing a loan against property. Each type of mortgage has its unique features and benefits, catering to various financial needs and situations. Whether you are considering a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage, an English mortgage, a mortgage by deposit of title deeds, or an anomalous mortgage, knowing the specifics will help you choose the best option.
