Mortgage Deeds and Loan Against Property – What You Should Know

If you’re planning to avail of a Loan Against Property, one document that plays a key role in the documentation process is the mortgage deed. It might sound technical, but in simple words, it’s the legal paperwork that ties your property to the loan. A mortgage deed officiates the use of your property as security.  

Let’s break it down so you know what to expect and how to stay prepared. 

What is a Mortgage Deed?

A mortgage deed is a written agreement between you and the lender. It confirms that your property has been pledged for a Loan Against Property. You still own the property and can live in it or use it, but the lender has legal rights over it until the loan is repaid. 

Why Does a Mortgage Deed Matter?

Mortgage deeds are important because: 

• They define the agreement between borrower and lender. 
• They provide legal clarity about the rights. 
• They provide details about the property being pledged.  
• They outline details about the loan, including the principal amount, the rate of interest, and the repayment schedule, along with prepayment terms. 
• They specify the obligations of both parties. 

What are the Types of Mortgage Deeds?

Each mortgage deed comes with its own features: 

• Registered Mortgage

Here, the mortgage deed is formally registered with the Sub-Registrar's Office. That makes it a matter of public record.  

The lender’s interest in the property is now visible to others, which prevents the borrower from selling or transferring the property without notice. This form of mortgage is often used in high-value or high-risk lending. 

• Equitable Mortgage

Also known as a mortgage by deposit of title deeds, this option is more flexible. 

The borrower gives the original property papers to the lender. There's no need for formal registration, which saves time and cost. 

Since the borrower retains possession and use of the property, this method is popular when quick access to funds is required. It’s efficient and avoids the administrative delays of registration. 

• Simple Mortgage

This type is straightforward. The borrower pledges the property without transferring possession. You keep using your home or asset, but the lender can sell it if you default. 

It provides the lender with a legal right of recovery while keeping things uncomplicated for the borrower. 

• Mortgage by Conditional Sale

Under this method, the property is conditionally transferred to the lender. If the borrower repays the loan, the property is returned. If not, the lender retains the asset. 

• English Mortgage

Also called a mortgage by legal charge, this one involves the transfer of legal ownership to the lender until the loan is paid off. 

Even though the lender gets the title, the borrower keeps the right to reclaim the property once repayment is complete.  

What Does a Typical Mortgage Deed Include?

Even if you’re doing a title deed deposit, it helps to know what a full mortgage deed typically consists of. 

It usually covers: 

• Your name and the lender’s 
• A clear description of the property 
• The loan amount and interest rate 
• How you’ll repay the loan (monthly EMIs or otherwise) 
• What happens if there’s a delay or default 
• Rights and duties of both parties 
• The terms and conditions of the loan 

If you're planning to use your property to raise funds, don’t overlook the mortgage deed. Factor in the stamp duty, and understand whether mortgage deed registration is required for your state.