What is the difference between a registered mortgage and an equitable mortgage?
The mortgage is a transfer of interest in a specific property to the mortgagee by the mortgagor.
In case of default by the mortgagor, the mortgagee can take possession of the mortgaged property for the realization of the dues or loan amount granted to the mortgagor.
Any lender would like to have repayment of the loan within a stipulated period with interest. Mortgage of property thus is considered as a secured option by the lender. Hence mortgage is obtained as a collateral security for the repayment of the loan.
As per the Transfer of property act, there are various types of mortgages.
There is a difference between a Registered mortgage and an equitable mortgage.
Both these mortgages have their own importance, but equitable mortgages are preferred by banks for to following reasons.
The mortgagor makes available the Original Title deed of the property. He is the owner of the property and his ownership and possession are proven. He has having original title deed with him and you can verify the possession by actually visiting the said property. Hence as a lender or a banker, you confirm that a property that is being mortgaged to you is a valued asset, marketable, and without any encumbrances. Secondly, the mortgagor hands over the Original Title deeds with the intention to create a mortgage as a security for the advance. This gives you the additional benefit that, since the original title deed is with you, the owner of the property will not be in a position to dispose of the property.
Hence in the case of an equitable mortgage handing over the original title deed to the mortgagee is the main condition.
When the original title deed is not available, lost or otherwise or the property which is to be mortgaged is an ancestral one, and the title deed is not at all available, then a Registered mortgage of the property is created.
Under equitable mortgage, you need not visit the subregistrar for the creation of an equitable mortgage. It can be created at notified places. Stamp duty and charges are comparatively less than registered mortgages. There is only oral assent for the creation of an equitable mortgage. It is simple and found convenient by both borrowers and bankers/lenders.
At the time of satisfaction of charge, you need not visit the Registrar’s office.
The original title deed is returned to you once you repay the entire dues to the bank.
Hence equitable mortgage is preferred over the registered mortgage.