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What Is Equitable Mortgage Home Loan?
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Equitable mortgage is also known as Mortgage by deposit of title deeds As the name suggest, equitable mortgage is created by the borrower in favour of the lender by deposit of title deed of immovable property as security to a lender until the loan is fully repaid. This creates a charge on the property, though no legal procedure is involved. The deposit of title deed may or may not have been officiated by way of a written emorandum of Deposit of Title Deeds. Even in the absence of any such Memorandum a written document, Equitable Mortgage is created when title deeds are deposited with the lender. Equitable mortgage can be effectuated only in the towns which are notified by the concerned State Governments.
The borrower takes money from the lender and keeps his/her property as a security against the loan amount taken. No legal documentation takes place but both parties sign an agreement which is signed by the notary.
There are some upsides to equitable mortgage loans. The stamp duty and other charges are comparatively low making it easy and more economical than a registered mortgage. In many Indian states, the stamp duty on an equitable mortgage is as low as 0.1 percent of the total loan amount which makes it the first choice for some home buyers in Tier III and Tier IV cities. Comparing this with other kinds of mortgages where stamp duty, registration and others charges are sometimes as high as 8% for male borrowers and 6% for female borrowers. Also, officials of HFCs and banks are exempted to appear before Registrar Office for registration or release of the Mortgage Deed. The lender returns the original deed to the borrower when the loan is completely repaid.
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Disclaimer: The information contained in this post is for general information purposes only. IIFL Home Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment, etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness, or of the results, etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability, and fitness for a particular purpose. Given the changing nature of laws, rules, and regulations, there may be delays, omissions, or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan product specifications and information that may be stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan.