Mortgage refers to the security of something given as a guarantee of repayment.
Mortgage: Mortgage refers to “the transfer of interest in specific immovable property for the purpose of securing the payment of money advanced by way of loan”. It must be borne in mind that only immovable property can be mortgaged. Lands, buildings, installed machinery are included in immovable property. The mortgagor (debtor) remains the owner of the property. However, he parts with only that portion of it that has been mortgaged.
Following are the Kinds of Mortgage
1. Simple mortgage
2. English mortgage
3. Usufructuary mortgage
4. Sub mortgage
Simple mortgage: when the possession of the mortgaged property, is not delivered, the transaction is known as simple mortgage.English mortgage: it is an absolute transfer of ownership in the mortgaged property. After the transfer, the mortgager remains bound to pay mortgage money.
Usufructuary mortgage: if the mortgagor deliver the possession of the mortgaged property an allows the mortgagee (the creditor) to receive any income there upon adjustable to the interest and or the principal amounts, it is known as usufructuary mortgage.
Sub mortgage:- where mortgage( the creditor) transfers his interest in the mortgaged property, such an act is known as Sub-mortgage.
There are mainly six kinds of mortgage. They are simple mortgage, mortgage by conditional sale, Usufructuary mortgage, English mortgage, mortgage by deposit of title deed and Anomalous mortgage. In simple mortgage the mortgagor keeps the possession of the property offered as the security. The mortgagor is personally responsible for the discharge of the debt. In case the mortgagor defaults to repay the money, the mortgagee has the right to obtain a decree for the sale of mortgaged property to recover the loan.
In case of mortgage by conditional sale, it is a mortgage where the mortgagor sells the property to the mortgagee on the condition to repayment of loan the property will be restored on him by the mortgagee. In case the mortgagor falls to pay off the loan the mortgagee obtains the absolute proprietorship of the property. Mortgage by conditional sale is not a favorite security with the bankers as it is risky and cumbersome.
Usufructuary Mortgage: in Usufructuary mortgage the mortgagor actually delivers the possession of the property to the mortgagee. The mortgagee is entitled to rent out the property and receive the rent. On repayment of the loan the possession of the property is transferred to the mortgagor.
Following are the kinds of sub-mortgage:
Pledge or pawn: It is contract under which an article is surrendered to the lender as security against the loan. The articles used as a pledge may include jewelry, share certificates, document, gold and other valuable things. The contracts as a pledge can only be effected when the articles are delivered to the lender.
Charge: where immovable property of the debtor is used as security for the payment of money to the creditor, is said to have a charge on the property. It is different from the mortgage in that the charge does not involve the transfer of interest in the property, while the mortgage does.
Lien: it refers to the right of holding in the goods of the debtor till he clears the debt. Lien may particular or general. In particular lien specific property is retained as a security. General lien is the right to retain all the goods the debtor. Banker, stockbrokers, factors, insurance companies, and warehouse exercise it.Hypothecation: Hypothecation refers to the mortgage of the movable property without transferring the possession of the goods. It is a right to recover the debt against the security of the specific goods.