Registered Mortgage Vs Equitable Mortgage

Date: 17-October,2021Last Updated: 26-September,2022
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Hey guys, we are back with another interesting realty topic. Today, let's explore the difference between equitable mortgage and registered mortgage, their definitions, advantages, disadvantages, and pretty much their overview!

But before that,

What is a Mortgage?

A mortgage is a loan that banks or other financial institutions provide to home buyers. The property or the house which is brought used the same will be pledged or mortgaged to the bank/financial institution till the said "loan" is repaid fully.

Learn more about Mortgagors and Mortgagees here

Though the concept of mortgages is common to us, the ideas of registered or equitable mortgages might not be, so let's explore further...

What is a Registered Mortgage?

A Registered Mortgage, also known as "Deed of Trust," is simply a formally written proof of transfer the borrower has to create a charge on the property under the authority or sub-registrar as a security for the lender.

A registered mortgage or deed of trust is a fully legal document that caters to both the lender and borrower. Once the borrower fully repays the amount of mortgage, he or she will be given back the "title deed" stating the ownership of the said property is with the individual. But if the borrower fails to repay the loan, the lender under legal protocols can take possession of the home or property.

This type of mortgage is mostly preferred by banks and lending organizations.

What is an Equitable Mortgage?

Equitable Mortgage or constructive mortgage like the Registered Mortgage is a transference of the property's "title deed " to the bank or lender organization as a security and creating a charge for the same.

However, Equitable Mortage( also known as an equated mortgage in some circles), unlike the former, does not have any legal procedure whilst undertaking.

Equitable Mortgage but has some advantages like,

1) The Stamp charge incurred is way lower than that of a registered mortgage

2) In the case of registered mortgage, the stamp charges have been paid twice in some states, that is, while creating the mortgage and also during the closure of the mortgage.

3) As mentioned earlier, to create an equitable mortgage, neither the borrower nor the lender has to approach a registration office or undergo administrative/legal procedures.

4) Thus, equitable mortgages are far easier and economical

What are the advantages of a Registered Mortgage?

As stated earlier, Registered Mortgages are preferred by the banks as it is backed up legally through the sub-registrar's office too. This prevents the borrower from engaging in any fraudulent practices like selling the property to a third party without closing the full payment. The new buyers might be unaware of the trap; thus, both they and the lenders will be subjected to a painstaking and stressful legal battle over the ownership. Because of the legal backup, registered mortgages also discourage fraudulent creditors and lending organizations from possessing the property illegally. Hence, registered mortgages are seen as a more viable option by the major banks in the nation.

So, folks, that's pretty much difference between equitable mortgage and registered mortgage.

We hope you liked the article, do share your thoughts and other info in our comments section below!

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