Loans Against Real Estate (Mortgage) 🏠

Definition: Mortgage is the transfer of an interest in specific immovable property (Land, Building) for securing a loan. (Transfer of Property Act, 1882).

• Mortgagor: Borrower.
• Mortgagee: Bank.

Types of Mortgage 🏘️

1. Simple Mortgage

• Possession remains with Borrower.
• Borrower binds himself personally to pay.
• If default, Bank can sell property through Court intervention.

2. Mortgage by Deposit of Title Deeds (Equitable Mortgage) 📑

• Most Popular in Banking.
• Borrower simply hands over original property papers (Title Deeds) to Bank in notified towns.
• No Registration needed (Saves Stamp Duty!).
• Creates an implied mortgage.

3. English Mortgage

• Property sold to Bank absolutely, with condition to re-transfer upon repayment.
• Rarely used.

Precautions & Risks ⚠️

1. Title Verification:
   • Check 13-30 years of history (Link documents).
   • Legal Opinion: Lawyer verifies title is clear (Non-encumbrance certificate - EC).
2. Valuation:
   • Civil Engineer/Valuer assesses market value.
   • Bank lends 75-80% of value (LTV Ratio).
3. Registration:
   • Check CERSAI database (to ensure property not mortgaged to another bank).
4. Liquidity Risk: Real estate is hard to sell quickly.

Quiz Time! 🎯

💡 Final Wisdom: "Real Estate is a solid asset, but 'Title' is everything. A house with a legal dispute is a liability, not an asset!" 🏠⚖️

Next up: Insurance Policies as Security - Life Insurance assignment! 🛡️