What is equitable mortgage?

Equitable Mortgage Meaning: Equitable mortgage is a type of mortgage where the terms of the agreement are made solely between the mortgagor and the mortgagee. There is no third party or government agency involved.

What is difference between simple mortgage and equitable mortgage?

An equitable or simple home loan is the most common form of home loan. In this case, when you borrow money from a lender, the property documents remain with the lender. … During an equitable mortgage, you give ownership of your property to your bank until you repay the entire amount.

How does an equitable mortgage work?

It is an unregistered mortgage enforced through the principles of equity. Equity means ‘fairness’ or ‘justice’. Therefore an equitable mortgage relies on the promise of the borrower. … It gives the lender the legal right to take possession of the property and to sell it if the mortgage goes into default.

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Why do banks prefer equitable mortgages?

What Banks Prefer Equitable Or Registered Mortgage? Instead having ample amount of benefits to both parties in equitable mortgage, banks prefer mainly registered mortgage because in equitable mortgage there are no records of the loan or the property in the sub registrar’s office.

Is it necessary to register equitable mortgage?

Title deeds or ownership documents of the property are deposited with the mortgagee or its agents to provide a collateral security for the loan. It is not always necessary to register equitable mortgage. However, with mounting housing loan frauds, many states have made registration compulsory.

What happens if a mortgage is not registered?

It is becoming more common for mezzanine lenders to accept an unregistered mortgage as security for a loan. While an unregistered mortgage gives the lender priority over any of the borrower’s unsecured creditors, an unregistered mortgage does not give a lender the same entitlements or benefits as a registered mortgage.

Who can mortgage the property?

The person who mortgages the property is called as “Mortgagor” and the person in whose favour property is being mortgaged is called the “Mortgagee” and the instrument by which mortgage is created is called the “Mortgage Deed”.

How do I start an equitable mortgage?

Where a debtor gives a binding undertaking to provide a proprietary interest in property to the credit provider, an equitable mortgage is created. The binding undertaking can be provided by the signing of a credit contract which states the property is provided as security.

Is an equitable mortgage enforceable?

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Equitable mortgage or an equitable interest One obviously cannot grant a legal mortgage of an interest that is recognised only in equity. … Common law did not recognise the equitable interests developed in the Chancellor’s courts, and accordingly would not enforce any legal dealings with them.

What is an equitable mortgage and how is one created?

An equitable mortgage arises where the formalities to create a legal mortgage have not been completed or where the asset being mortgaged is only an equitable interest. An equitable mortgage only transfers a beneficial interest in the asset to the mortgagee with legal title remaining with the mortgagor.

How do I cancel my equitable mortgage?

Get the Equitable Mortgage Cancelled at the Sub Registrar’s Office. Contact your bank and arrange to cancel the bank’s charge over the property at the Sub Registrar’s office. The bank official will have to approach the Sub Registrar and register the cancellation of the equitable mortgage.

Where are equitable mortgages created?

Even in the absence of any such Memorandum (a written document), Equitable Mortgage is created when title deeds are deposited with the lender. Equitable mortgage can be effectuated only in the towns which are notified by the concerned State Governments.

Can legal heir create equitable mortgage?

In legal opinion obtained, it is suggested that the bank can create equitable mortgage by taking signatures of party and his mother or by obtaining no objection certificates from all legal heirs(including party’s sisters)and by obtaining latest sandaran khasra.

Who can create equitable mortgage?

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Yes the equitable mortgage can be created of the individual is registered money lender and had license for same. See any person trust involved in money lending business and is registered then the mortgage can be created. An equitable mortgage on an immovable property can be created by a written deed.

What is an equitable charge on property?

An equitable charge refers to a security placed against a property – it is like a mortgage and may be enforced by a court order for sale. It does not grant ownership or possession to a creditor but does give the right to the judicial process for recovery of the loan amount in case of non-payment.

Can equitable mortgage be created on agricultural land?

Agricultural land: Certain states prohibit equitable mortgages on agricultural land. Further, in certain states permission from/notice to the revenue authority may be required before the creation of an equitable mortgage on agricultural land.

Is an unregistered mortgage an equitable mortgage?

An equitable mortgage is unregistered and is not a charge on the land. Instead, it serves as the representation of a promise by the borrower to reserve the relevant equity in the property for the lender when the property is sold.

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