Types of Mortgage in India: All Six Explained
When you take a home loan, the bank holds your property as security through a mortgage. But there is more than one kind of mortgage. The Transfer of Property Act lists six types, each with different rights for the lender. Knowing the type helps you understand what the bank can and cannot do. This guide explains the six types of mortgage in India in simple terms.
Quick summary
- A mortgage is the transfer of an interest in property to secure a loan.
- Section 58 of the Transfer of Property Act lists six types.
- The most common for home loans is the equitable mortgage, by deposit of title deeds.
- Each type differs in whether possession moves and how the lender can recover.
- Most mortgages must be registered, except the equitable mortgage in notified towns.
What a mortgage is
A mortgage is when you transfer an interest in your property to a lender as security for a loan. You keep ownership, but the lender gets a right over the property until you repay. If you default, the lender can recover the loan from the property. The exact rights depend on the type of mortgage.
The six types under Section 58
| Type | Key feature |
|---|---|
| Simple mortgage | No possession to lender; lender can sell through court on default |
| Mortgage by conditional sale | Sale becomes final if you fail to repay by a set date |
| Usufructuary mortgage | Lender takes possession and keeps rent or income until repaid |
| English mortgage | Property transferred to lender, to be reconveyed on repayment |
| Mortgage by deposit of title deeds | You hand over title deeds; also called equitable mortgage |
| Anomalous mortgage | A mix of two or more of the above |
1. Simple mortgage
You do not give possession to the lender. You promise to repay, and if you default, the lender can go to court to sell the property and recover the money. It must be registered.
2. Mortgage by conditional sale
The property is sold to the lender on the condition that the sale is void if you repay by the agreed date, or becomes absolute if you do not. The condition must be in the same document.
3. Usufructuary mortgage
The lender takes possession of the property and enjoys its rent or produce in place of interest, until the loan is repaid. You do not give up ownership, only the use for the loan period.
4. English mortgage
You transfer the property to the lender with a promise to repay by a certain date. The lender agrees to transfer it back once you repay. The lender has stronger rights, including sale on default.
5. Mortgage by deposit of title deeds (equitable mortgage)
This is the most common for home loans. You simply deposit the original title deeds with the lender as security. It is quick and, in notified towns, does not need registration. This is why banks ask for your original property papers when you take a loan. It works alongside a tripartite agreement in many builder purchases.
6. Anomalous mortgage
This is any mortgage that does not fit neatly into the above and combines features of two or more types. The rights depend on the terms of the specific deed.
Which type applies to your home loan
For most home loans, banks use the equitable mortgage by deposit of title deeds, sometimes with a registered or simple mortgage added for extra protection. When you repay fully, the bank returns your title deeds and issues a no-dues letter. Make sure you collect the papers and get the charge removed from the records. To confirm no charge remains, read how to check property ownership online.
Frequently asked questions
How many types of mortgage are there in India?
Six, listed under Section 58 of the Transfer of Property Act: simple, conditional sale, usufructuary, English, deposit of title deeds, and anomalous.
Which mortgage do banks use for home loans?
Usually the equitable mortgage, by deposit of title deeds, sometimes with a registered or simple mortgage for extra security.
What is an equitable mortgage?
A mortgage created by handing over the original title deeds to the lender. In notified towns it does not need registration.
Does a mortgage transfer ownership to the bank?
No. You remain the owner. The bank only gets a right over the property until the loan is repaid.
Do mortgages need to be registered?
Most do. The main exception is the equitable mortgage by deposit of title deeds in notified towns.
What happens to the mortgage when I repay?
The lender returns your title deeds, issues a no-dues letter, and the charge is removed from the records.
What is a usufructuary mortgage?
One where the lender takes possession and keeps the rent or income of the property instead of charging interest, until repaid.
Can a lender sell my property on default?
Depending on the type, yes, either through court or under the loan agreement and recovery laws.
What is an anomalous mortgage?
A mortgage that mixes features of two or more of the standard types. The rights follow the specific deed.
Why does the bank keep my original property papers?
Because a home loan is usually an equitable mortgage, created by depositing the original title deeds as security.
Knowing the type of mortgage helps you understand your rights and the bank's. For a home loan, it is almost always the deposit of title deeds. When you repay, collect your papers and clear the charge. To plan the loan itself, read our tripartite agreement guide.
