Everything You Need to Know About Mortgage Deed

Property has never simply been a place to live and/ or reside but an asset that can be monetised by charging/ encumbering the same in favour of a lender to secure availment of credit facilities. Mortgage Deed are the most efficient way to tap that value. If you’ve ever wanted to know what a mortgage is and how it works, or how to get one without forfeiting your ownership of your home, you came to the right place.

What Exactly Is A Mortgage Deed?

A mortgage is the transfer of an interest in an immovable property as a security for the repayment of money borrowed from a lender or financial institution. This implies that in case the borrower fails to return back the loan amount availed, the lender has the power to acquire the mortgaged property by enforcing security interest in accordance with the provisions contained under applicable laws.

Common Type of Mortgage Deed

There are six potential types of mortgages detailed under the Transfer of Property Act, 1882. Each one works a little differently, depending on who keeps the property, how the money is paid back, and what happens if the borrower can’t repay. Here’s a quick and simple breakdown:

• 1. Simple Mortgage: The borrower promises to repay the loan. If they don’t, the lender can ask the court to sell the property. The borrower keeps the property until then.
• 2. Mortgage by Conditional Sale: The borrower “sells” the property to the lender, but if they repay the loan, the sale is cancelled. If they don’t, the sale becomes final.
• 3. Usufructuary Mortgage:The lender takes possession of the property and enjoys its income (Rent, Profits etc). However, he cannot sell the property to recover the loan/debt.
• 4. English Mortgage: The borrower gives full ownership to the lender with a promise to repay by a fixed date. Once the loan is repaid, the property is returned to the borrower.
• 5. Equitable Mortgage (also called Mortgage by Deposit of Title Deeds): This is a simple, less-paperwork type of mortgage. The borrower just hands over the property documents to the lender as security. Generally, no formal agreement—just trust.
• 6. Anomalous Mortgage:This is a mix of two or more types of mortgages or something unique that doesn’t fit into the usual categories.

Among these, the equitable mortgage stands out for its simplicity and reliance on trust—but trust needs protection, and that’s where the Notice of Intimation steps in.

Must Haves in Mortgage Deed

• Identify the Parties

A sound mortgage deed starts with crystal-clear identification and the date on which the deed was entered into. List the borrower and lender, including full names, addresses, and contact details—no room for confusion.

• Get the Loan Details Right

Leave no doubt when it comes to the terms and conditions of loan— amount of loan availed, relevant interest rates (with moratorium period, if any), and when repayment is due and, most importantly, outline the consequences of missing a payment.

• Details of Property

A mortgage deed must clearly describe the details of property you’re putting up as security. That means details like complete address, type of property (house, flat, land), admeasurements, details of chain deeds, etc.

• Get All Necessary Permissions

If the property is co-owned, or if someone else's name is on it (like a spouse or family member), their written consent before creation of the same is a compulsory requirement. The same goes for flats in housing societies (many societies require you to get their permission before mortgaging the same in favour of the lender) and/ or industrial leasehold lands located and situated in industrial areas or industrial parks (obtaining NOC/ Consent is a compulsory requirement prior to creation of mortgages). Skipping this step can cause big legal headaches later. Commercial/Industrial Property? Then it’s even more important to check if permissions are needed from the local development authority, industrial park management, or zoning board.

• Stamp Duty & Registration: Legal Must-Haves

Think a signature seals the deal? Think again. To make your mortgage deed official, ensure you pay the stamp duty and get it registered (if the same is considered compulsory in accordance with stamp laws of the respective states)—no exceptions.

Why Bother Registering a Mortgage? Here's Why It Really Matters

In the event the mortgage document is considered as a compulsorily document in accordance with stamp laws of the respective states, you MUST register it. It’s not optional. It’s the law. If it is not registered, it cannot even be admitted as evidence in court of law under Section 17 of the Registration Act, 1908,. So, if things go wrong and the borrower does not repay, the lender may not even have the legal right to take back the property, simply because they did not register the papers correctly.

How long do you have?

You get 4 months from the date of execution of the agreement (without payment of penalty) and 8 months from the date of execution of the agreement (with penalty) to get the same registered. Miss that window, and you could lose your legal protection.

What about Equitable Mortgages?

These are simpler—just handing over the custody of property documents to the lender without signing a full/ detailed agreement. You may not need to register the mortgage itself, but—in states like Maharashtra, you must file a Notice of Intimation (NOI) within 30 days. Think of the Notice of Intimation as a public announcement: “This property is Mortgaged!”. Filed with the Registrar of Assurances, within 30 days of the mortgage agreement, this notice ensures everyone is informed about the encumbrance on a property. It is particularly important for equitable mortgages, where the title deeds are lodged with original form, without a full and fledged mortgage document documenting the terms and conditions pertaining to the same. Such a legal assurance will not allow fraudulent activity and assurances that a property cannot be used as security to more than one loan.

Ultimately, creating a perfect mortgage deed is not just about fulfilling the legal obligations, but about protecting your future and securing your property. A lawyer can help ensure your mortgage deed is perfect, and that your interests are protected for the future. Don't gamble, get some legal advice!