The term mortgagee was firstly well-defined by the Transfer of Property Act, 1882. Since time immemorial it is seen that the property whether it be money, real estate, or the animal is kept as a mortgage during any financial crisis. In today’s time, those property is kept in the hands of the financial institution as security or the loans and that type of loan is knowns as a Registered mortgage loan.
Loan and Mortgage Loan
A loan is an amount of money that one or more than one individual or; companies borrow from banks or; any other financial organizations to economically manage the scheduled or unplanned events. However, after this, the borrower incurs a debt, which he has to pay back with interest within a given period.
A mortgage refers to the method of offering something as a guarantee or security in contradiction to a loan. A mortgage loan can be used to buy or build a house or refinance a property. Refinancing means getting a new loan for a property although the original loan is still being paid. It is usually done to get a loan with better terms. A mortgage loan is a loan used either by purchasers of tangible property to increase funds to purchase real estate or; by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged.
This kind of loan is taken either to buy or; build a house or; refinance a property. Refinancing refers to getting a new loan for a property while the original loan is still unpaid.
Meaning of Registered Mortgage
A registered mortgage is a type of loan in which the mortgagor (borrower) willingly gives all the rights to the bank over the property in case the person is unable to make the repayment of the loan or if found as a loan nonpayer. A registered mortgage is also commonly known as a Deed of Trust.
Further, with the registered mortgage, the bank has extreme rights over the property and in case of failure to repay the loan in the given period to the bank, then such property is transferred to the bank. However, after this, the banks will have all the control over the property mortgaged.
Equitable Mortgage and Registered Mortgage
An equitable mortgage has come from the word equity and is a type of financing planning under which the mortgagor (borrower) and the mortgagee (financial institution like banks) mutually decide on the terms and conditions of the mortgage loan. Further, in such type of financing, the government body or any other third party abstains from envelopment.
Following are the key difference between Equitable Mortgage vs. Registered Mortgage:
| Parameters | Equitable Mortgage | Registration Mortgage |
| Process | Buying stamp paper is mandatory | Need to contact the office of the sub-registrar |
| Affordability | Less Expensive in comparison | Slightly more expensive |
| Registration | No registration needed | Registration is needed |
| Cost Involved | The cost of stamp duty is either 0.1% of home value or 0.2% | Need to spend 5% of the home value |
| Lender’s Rights | In case of default, the financial institution takes over the mortgage property and auctions it to recoup its loss. | In case of default, the mortgaged property is transferred to the financial institution and they have the right to do whatever they want to do. They can use or sell it. |
| Risk | If compared to a registered mortgage, an equitable mortgage has a higher risk. | It provides security to both borrowers and lenders. It is risk-free. |
Registered Mortgage Process
A registered mortgage deed is signed between the borrower, lender, and the registrar at the sub-registrar office. A registered mortgage is registered in the records of the registrar. Further, the registered Mortgage borrowers must approach the Sub-Register office. This registration is mandatory and is more expensive as compared to an equitable mortgage.
Following are the steps to check the status of the mortgage of such property:
- At first visit the official website of CERSAI at https://www.cersai.org.in/CERSAI/home.prg.
- Click on the ‘Public search’ tab.
- On-screen the options will appear; Asset-based search, debtor-based search, AOR Based search, search report.
- Click and see the Status.
FAQs
What is a registered mortgage?
A registered mortgage is a legal document that grants a lender a security interest in a property owned by a borrower. It is registered with the appropriate government authority, usually a land registry or a similar institution, to provide public notice of the lender’s claim on the property.
How does a registered mortgage work?
When a borrower takes out a loan secured by a registered mortgage, they pledge their property as collateral to the lender. If the borrower defaults on the loan, the lender can foreclose on the property and sell it to recover the outstanding debt.
What are the benefits of a registered mortgage for lenders?
Registered mortgages provide lenders with a legal claim on the borrower’s property, which reduces the risk of lending. It allows lenders to foreclose on the property if the borrower defaults, providing a means to recover the outstanding debt.
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