Questions

1) What are the different types of mortgages? What are the

differences between them?
A: • Simple mortgage is one where possession of the mortgaged
property is not delivered to the mortgagee, but the mortgagor
legally binding themselves to repay the mortgage money, failing
which the mortgagee has the right to sell of the property to earn
the money back.
• English mortgage is one where the mortgagor agrees to repay
the mortgagee by a certain date, and transfers the property to the
mortgagee. Once the debt is repaid, the property is returned to the
mortgagor.
• Usufructuary mortgage is one where the mortgagor grants the
mortgagee possession of the property until repayment of the
mortgage money, and in the meantime the mortgagor is allowed to
receive rents and profits from the property and can appropriate the
same in lieu of interest/payment of the mortgage money.
• Equitable mortgage is one where the mortgagor deposits the
original title deeds of the mortgaged property to the mortgagee
with intent to create a security on it for the debt.
• Mortgage by conditional sale is one where the mortgagor sells
his property to the mortgagor on the condition that the sale
becomes absolute if he defaults on repayment of the debt, and
becomes void if the debt is repaid.
2) How is equitable mortgage different from the other types of
mortgages?
A: It is the only kind of mortgage which involves depositing the
original title documents/deeds of the mortgaged property with the
mortgagee by the mortgagor.
3) How is equitable mortgage created?
A: By drafting a memorandum for equitable mortgage, and the
borrower giving possession to the lender of the original title
 documents if the property which serves as security for the
mortgage.

DEED OF MORTGAGE
Memorandum for Equitable Mortgage made at Mumbai, on this 16th day
of February in the Christian year 2019, between
Ganesh Remain of Mumbai,
Indian inhabitant, residing at ___
(Hereinafter referred to as the borrower, which expression shall…of the
one part)
AND
State Bank of India,
A banking corporation constituted under SBI Act, having head office at
___
(Hereinafter referred to as the lender, which expression…of the other
part)

WHEREAS,
1) The borrower carries on business of manufacturing and dealing in
drugs, hereinafter referred to as the products, and is in need of
working capital and has therefore obtained term loan of ₹20 crore
from the lender.
2) The landers has called upon the borrower to create in its favour,
security for the due repayment of the loan (hereinafter referred to
as ‘the loan’), which the borrower has agreed over his assets, the
 pricing of two of his premises by way of deposit of title deeds to
which the lender has acceded.

Now this Memorandum witnesseth and is hereby agreed between the

parties as follows:
1. In consideration of the lender agreeing to London advance
the sum of ₹__ hereinafter referred to as ‘the debt’; the
borrower nearby creates charge upon his assets more
particularly described in Schedule A hereto annexed
(hereinafter referred to as ‘the mortgage properties’) by
depositing with the lender original copies of the documents,
particulars whereof are set out in Annexure B hereto
annexed, hereinafter referred to as ‘documents of title’ with
intent to create security for the due repayment of the loan
comprising principal amount of ₹__ and interest thereon @
18% per annum from the date of disbursement till the
repayment of the debt.
2. The moreover covenants and undertakes as follows:
a) He is absolutely entitled to, and has right, title and
interest in the mortgaged properties.
b) He shall we pay the debt comprising principal and
interest within __ months from the date of
disbursement without any default, failing which the
lender shall have the right to crystallize the debt and
recall the entire debt.
c) The documents of title have been deposited with the
lender with intent to create a security and charge in
respect of mortgaged property, and the lender shall be
entitled to retain the documents until the debt has been
cleared.
 d) He shall pay and bear stamp duty and registration fee
in respect of this Memorandum.
IN WITNESS THEREOF