Types of Mortgages Under the Transfer of Property Act, 1882: All 6 Kinds Explained Simply

Key Details

Introduction

Whenever someone borrows money against their house or land, whether from a bank or a private lender, that transaction is a mortgage in the eyes of the law. The Transfer of Property Act, 1882 does not treat every mortgage the same way. Depending on whether possession is handed over, how repayment is structured, and what rights each side holds, a mortgage can take one of six distinct legal forms. This classification is one of the most frequently tested areas of property law in judiciary exams, so getting the six types clear is essential.

What Is a Mortgage Under Section 58(a)

Section 58(a) defines a mortgage as the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement that may give rise to a financial liability. The person who mortgages the property is called the mortgagor, the person to whom it is mortgaged is the mortgagee, and the amount secured is called the mortgage money. Unlike a sale, exchange, or gift, a mortgage transfers only a limited interest in the property, not full ownership.

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The Six Types of Mortgages

1. Simple Mortgage, Section 58(b)

In a simple mortgage, the mortgagor does not hand over possession of the property. Instead, the mortgagor personally agrees to repay the mortgage money, and if repayment fails, the mortgagee has the right to have the property sold through a court order. The mortgagee cannot sell the property directly without going to court. A simple mortgage must always be made through a registered instrument, regardless of the loan amount.

2. Mortgage by Conditional Sale, Section 58(c)

Here the mortgagor ostensibly sells the property to the mortgagee, but the sale is subject to conditions: it becomes absolute if the loan is not repaid by a set date, or it becomes void if the loan is repaid. The agreement must clearly record these conditions, and registration is compulsory if the loan amount is one hundred rupees or more.

3. Usufructuary Mortgage, Section 58(d)

In this type, the mortgagor delivers possession of the property to the mortgagee, who then collects the rents or produce from the property and applies that income towards repayment of the debt. The mortgagor is not personally liable to repay, and the mortgagee, in turn, cannot seek foreclosure or a court-ordered sale. The mortgagee's only remedy is to keep collecting the income until the debt is cleared.

4. English Mortgage, Section 58(e)

An English mortgage involves an absolute transfer of the property to the mortgagee, but with a clear condition that the property will be re-transferred to the mortgagor once the debt is repaid in full by a specified date. Registration is compulsory if the loan is one hundred rupees or more.

5. Mortgage by Deposit of Title Deeds, Section 58(f)

This is also known as an equitable mortgage. It is created simply by the mortgagor depositing the original title documents of the property with the mortgagee, with the clear intention of creating security for a loan. No formal written mortgage deed is legally required, and registration is not mandatory. However, this type of mortgage is legally recognised only in specified towns notified by the government, such as Kolkata, Mumbai, and Chennai, or other areas the government may notify.

6. Anomalous Mortgage, Section 58(g)

Any mortgage that does not fit into the five categories above is called an anomalous mortgage. It usually arises from a combination of mortgage types, such as a simple mortgage combined with a usufructuary mortgage, or a usufructuary mortgage combined with a mortgage by conditional sale. Anomalous mortgages can also arise from local customs. They must be made in writing and properly attested, just like the other categories.

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Core Rights That Apply Across Mortgage Types

While the six types differ in structure, two rights run through the law of mortgages generally:

•        Under Section 60, the mortgagor has the right of redemption, meaning the right to reclaim the property upon full repayment of the debt.

•        Under Section 67, the mortgagee has the right to seek foreclosure or sale of the property if the debt remains unpaid, subject to the specific rules that apply to each type of mortgage.

Frequently Asked Questions

How many types of mortgages are recognised under the Transfer of Property Act, 1882?

Six types, defined under Section 58(b) to Section 58(g): simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, mortgage by deposit of title deeds, and anomalous mortgage.

What is a simple mortgage?

A mortgage where possession stays with the mortgagor, who personally undertakes to repay the debt, and the mortgagee can only have the property sold through a court order on default.

What is a usufructuary mortgage?

A mortgage where the mortgagor hands over possession to the mortgagee, who repays the debt from the rents or income of the property, and cannot seek foreclosure or sale.

What is an English mortgage?

A mortgage where the property is absolutely transferred to the mortgagee, subject to a condition that it will be re-transferred once the mortgagor repays the debt by a fixed date.

What is a mortgage by deposit of title deeds?

An equitable mortgage created simply by depositing the property's title documents with the mortgagee to create security, without a formal mortgage deed, valid only in government notified towns.

What is an anomalous mortgage?

A mortgage that does not fall within the five standard categories, often formed by combining features of two types, or arising from local custom, and it must be in writing and attested.

Is registration mandatory for a simple mortgage?

Yes, a simple mortgage must always be made through a registered instrument, regardless of the loan amount.

What is the mortgagor's right of redemption?

Under Section 60 of the Transfer of Property Act, the mortgagor has the right to reclaim the mortgaged property upon full repayment of the mortgage debt.

What remedy does a mortgagee have if the debt is not repaid?

Depending on the type of mortgage, the mortgagee may seek foreclosure or sale of the property under Section 67, though the exact remedy varies by mortgage type.

Why is the classification of mortgages important for judiciary exam aspirants?

Because Property Law papers frequently test the distinguishing features of each mortgage type through both direct and scenario based questions.

Conclusion

Mortgages sit at the intersection of property law and everyday finance, which is exactly why judiciary exams test this area so consistently. Knowing the six categories under Section 58, along with the core rights of redemption and foreclosure, gives aspirants a strong foundation for both objective and descriptive questions on this topic.

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