Understanding the Concept of Equitable Mortgage Loan: Advantages and Benefits

Introduction

The diverse real estate market has compelled Indians to embrace variety in mortgage loan types. Amidst existing mortgage types, the concept of an equitable mortgage has garnered massive attention. An equitable mortgage is a unique mortgage type allowing borrowers to secure a loan against their property.

What Is an Equitable Mortgage?

An equitable mortgage, also referred to as a mortgage by deposit of title deeds, is a type of mortgage where the borrower pledges the title deed of his/her property as security to the lender. This mortgage type is established when the borrower hands over the physical possession of the property papers to the lender. The lender holds the deeds until the borrower repays the loan in full.

In an equitable mortgage, there is no requirement for the mortgage to be executed as a deed or registered in the land registry. This differs from traditional mortgage types in India, which often necessitate registration and legal formalities. Nevertheless, it’s essential to remember that even though the deed transfer is unregistered, the equitable mortgage still holds legal recognition and enforcement.

Advantages of Equitable Mortgage

Convenience: 

An equitable mortgage is simple to arrange, making it one of the most convenient types of mortgages in India. The process involves a straightforward transfer of property documents between the borrower and the lender, bypassing complicated registration processes. 

Accessibility: 

This mortgage type welcomes borrowers from various backgrounds. It does not discriminate against low-income borrowers or those who lack a solid credit history. As long as the borrower owns property to mortgage, they’re eligible for an equitable loan.

Affordability: 

Equitable mortgage loans generally come with lower interest rates and flexible repayment terms. This makes them comparatively affordable and less strenuous financially. 

Assured Confidentiality: 

Unlike traditional mortgages where property details are made public through registration, an equitable mortgage ensures confidentiality for both the borrower and lender. 

Loans on Properties without Clear Title: 

If a property lacks clear titles necessary for a traditional mortgage, an equitable mortgage can be an avenue for acquiring loans.

Legal Protection: 

Even though not registered, equitable mortgages still offer the same legal protection as other mortgage types. In a default situation, the lender can invoke the power of sale or appoint a receiver.

Benefits of Equitable Mortgage

Expansive Loan Amounts: The loan amount in equitable mortgages is often broad and depends mainly on the property’s market value. Because of this, borrowers can receive substantial loan amounts, especially when mortgaging high-value properties.

Quick Processing: 

Compared to other mortgage loan types in India, equitable mortgages have faster processing times. As the process is less formal and less administratively intensive, loan disbursals are quicker. 

Expense Reduction: 

By skipping registration and related legal processes, the borrower can save considerably on various expenses such as stamp duty and registration fees.

Scope for Negotiation: 

As the transaction is private, there’s room for personalised negotiation between the borrower and lender. This flexibility can result in better loan terms and conditions favourable to the borrower.

Bajaj Finserv App

Securing a equitable mortgage loan is now hassle-free with the Bajaj Finserv app. Its easy-to-use interface facilitates swifter funds, eligibility checks, and transparent repayment options. Users benefit from instant updates and guidance, empowering them to maximize property assets efficiently and make informed financial decisions.

In Conclusion

The equitable mortgage stands out amongst various mortgage loan types in India, primarily due to its user-friendly processes, affordability, and accessibility. With a broad range of benefits from quick loan processing to legal protection, it proves an appealing financing option for many property owners.

Therefore, considering the nature of an equitable mortgage, it is instrumental in offering substantial financial support in urgent situations. However, borrowers should thoroughly understand loan terms, combined with the potential risks involved, to secure a deal that maintains harmony with their financial framework.