Are you planning to purchase a house then you should know about the mortgage and its benefits. A mortgage is a modern way of buying a house. There are various types of mortgages, but in this answer, I will explain - What is a simple mortgage?
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A person can borrow money from the bank and pay a down payment from his pocket at the time of purchase. The rest of the amount is paid by the bank. Later he/she will pay that amount to the bank as a monthly EMI. A mortgage is different from any other loan like a personal loan or student loan. Since the bank can use your house as collateral, which means if you fail to repay the loan to the bank back on time, they can take possession of your home.
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The simple mortgage meaning refers to a type of mortgage that involves the transfer of a property's legal ownership to the lender as security for a loan. It is a method of creating a valid mortgage in India.
Here are the key features of simple mortgage in property law:
The borrower transfers the legal ownership of the property to the lender as security for a loan.
Unlike a "possession mortgage" or "English mortgage,", in a simple mortgage, the possession of the property remains with the borrower. The lender does not have the physical possession of the property except there is a default on the loan.
The borrower has the right to redeem the property by repaying the loan amount along with the interest. The lender is legally obligated to transfer the property's ownership back to the borrower.
It provides a high level of security for the lender. In case of default by the borrower, the lender can sell the property and recover the outstanding loan amount.
Simple mortgage must be registered as per the Registration Act, 1908 to be legally valid.
Stamp duty is also required for the mortgage deed.
It is
used for securing loans for various purposes, including home loans, business loans, and personal loans.
This is a simple mortgage definition.
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- In a simple mortgage, the lender can recover his/her loan amount by taking a money decree from the court.
- The loan acquired via a simple mortgage is the borrower's personal liability. The lender can either sell the mortgaged property to recover loan amount or they can sue the borrower.
- The possession of the property remains with the borrower.
What is simple mortgage?
Gyan Prakash
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2021-03-17T12:18:46+00:00 2023-07-18T21:04:14+00:00Comment
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