A mortgage is the transfer of an interest in a specific immovable property to secure the repayment of a loan. The Transfer of Property Act, 1882 recognises six distinct types of mortgage under the Transfer of Property Act, and the one you sign decides who holds the title deeds, whether the lender can take possession, and how the lender can ultimately recover the money if you default. Choosing — or being asked to sign — the wrong kind can quietly cost you both money and control over your property.
This guide explains each type in plain English, what it practically means for an ordinary borrower or property owner, and what to verify before you put your signature on a mortgage deed.
What is a mortgage under TPA?
Section 58(a) of the Transfer of Property Act, 1882 defines a mortgage as the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced (a loan), an existing or future debt, or the performance of an engagement that may give rise to a money liability.
The person who borrows and transfers the interest is the mortgagor. The lender who receives that interest is the mortgagee. The principal and interest secured are the mortgage-money, and the document by which the transfer is effected is the mortgage deed.
Importantly, a mortgage is not a sale. The mortgagor retains ownership and has the right to get the property back once the debt is repaid — this is the doctrine of "once a mortgage, always a mortgage." Any clause that tries to permanently block the mortgagor from redeeming the property (a "clog on the equity of redemption") is generally void.
The six types of mortgage under the Transfer of Property Act
Section 58 of the Act lists six kinds of mortgage. They differ mainly on three questions: Is the title deed handed over? Does the lender get possession? And how does the lender recover the money — by selling the property or by foreclosing?
1. Simple mortgage — Section 58(b)
The mortgagor does not deliver possession but personally binds themselves to repay. If they default, the mortgagee cannot just keep the property; they must go to court and obtain a decree to have the property sold. This is one of the most common forms for ordinary loans.
2. Mortgage by conditional sale — Section 58(c)
The property is ostensibly "sold" subject to a condition that the sale becomes absolute on default, or becomes void on repayment. The lender's remedy here is foreclosure (extinguishing the mortgagor's right to redeem), not sale. The law requires the condition to be embodied in the same document that effects the sale, to prevent disguised outright sales.
3. Usufructuary mortgage — Section 58(d)
The mortgagor delivers possession to the mortgagee, who then enjoys the rents and profits (the "usufruct") in lieu of interest, or towards principal, or both. There is no personal liability to repay and the mortgagee cannot sue for sale or foreclosure — recovery happens through enjoyment of the property until the debt is satisfied.
4. English mortgage — Section 58(e)
The mortgagor binds themselves to repay on a certain date and transfers the property absolutely to the mortgagee, subject to a proviso that it will be re-transferred on repayment. Despite the absolute transfer, the mortgagor keeps the equity of redemption. The usual remedy is sale.
5. Mortgage by deposit of title deeds (equitable mortgage) — Section 58(f)
In notified towns, a person can create a mortgage simply by delivering documents of title to the lender with intent to create a security. No registered deed is necessarily required, which makes it quick and popular with banks. It is often called an equitable mortgage.
6. Anomalous mortgage — Section 58(g)
Any mortgage that is not one of the above five, or is a combination of them, is an anomalous mortgage. Its terms are governed mainly by the contract between the parties.
Simple mortgage vs equitable mortgage and the others: a comparison
| Type (Section) | Title deeds delivered? | Possession to lender? | Personal liability to repay? | Lender's main remedy | Registration |
|---|---|---|---|---|---|
| Simple — 58(b) | No | No | Yes | Sale (via court) | Required |
| Conditional sale — 58(c) | No | No | No (generally) | Foreclosure | Required |
| Usufructuary — 58(d) | No | Yes | No | Enjoy rents/profits | Required |
| English — 58(e) | No | No (usually) | Yes | Sale | Required |
| Deposit of title deeds — 58(f) | Yes | No | Yes (usually) | Sale | Often not required* |
| Anomalous — 58(g) | Depends | Depends | Depends | Per contract | Depends |
*Registration of an equitable mortgage depends on whether a memorandum recording the deposit is treated as the instrument creating the mortgage; practice and stamp-duty requirements vary by State. Verify locally before relying on this.
Rights of mortgagor and mortgagee
The Act balances both sides. Knowing these matters most when a loan goes wrong.
What the mortgagor (borrower) gets
- Right of redemption (Section 60): On repaying the mortgage-money, the mortgagor can require the mortgagee to return the documents, re-transfer the property, and hand back possession. This right cannot be defeated by an unfair clog.
- Right to inspect and take copies of documents (Section 60B).
- Right against accession, improvements and a renewed lease made to the property during the mortgage.
What the mortgagee (lender) gets
- Right to sue for the mortgage-money in defined circumstances (Section 68).
- Right to foreclosure or sale (Section 67), depending on the type of mortgage.
- Right to possession and to recover expenses for preservation in certain mortgages.
In practice, banks recovering housing or business loans often act under the SARFAESI Act, 2002, which lets a secured creditor enforce security without first going to court in many cases — a separate and powerful regime that sits alongside the TPA.
Why registration matters
Under Section 59 of the TPA, a mortgage (other than a mortgage by deposit of title deeds) securing Rs. 100 or more must be made by a registered instrument signed by the mortgagor and attested by at least two witnesses. An unregistered mortgage deed that ought to have been registered may not be admissible to prove the mortgage. Stamp duty also applies under the relevant State Stamp Act. Skipping registration to save cost can leave a lender's security unenforceable and a borrower facing disputes about what was really agreed.
Substance over form in mortgage disputes
Courts consistently stress the substance-over-form principle in mortgage disputes — what matters is the true nature of the transaction, not merely the label the parties put on the document. A transaction styled as a sale may be read as a mortgage by conditional sale if the condition appears in the same document and the real intent was security rather than an outright transfer. Because the position turns on the exact wording and facts, have the document examined before relying on its label.
Statute renumbering note: criminal-law statutes have changed — the IPC is now the Bharatiya Nyaya Sanhita (BNS) and the CrPC the Bharatiya Nagarik Suraksha Sanhita (BNSS). The Transfer of Property Act, 1882 has not been replaced, but always verify the current section text on the official source before acting.
If a mortgage, registration or enforcement issue affects your property, our property and real estate law practice can help you assess the document and your options.
Frequently Asked Questions
What is the difference between a simple mortgage and an equitable mortgage?
In a simple mortgage the borrower keeps the title deeds and does not give possession, and the lender must go to court for a sale on default. In an equitable mortgage (mortgage by deposit of title deeds) the borrower hands the title documents to the lender to create the security, which is faster and common with banks.
Which mortgage gives the lender possession of my property?
The usufructuary mortgage under Section 58(d). The lender takes possession and adjusts rents and profits against interest or principal.
Can a lender keep my property forever if I default?
No. The mortgagor's right of redemption under Section 60 is protected. Depending on the mortgage type, the lender can seek sale or foreclosure through the proper process, but cannot impose a permanent bar on you getting the property back (no "clog on redemption").
Does every mortgage need to be registered?
Most mortgages of Rs. 100 or more need a registered, attested instrument under Section 59. The mortgage by deposit of title deeds is the main exception, though State stamp and memorandum practices vary — verify locally.
What is foreclosure and which mortgage allows it?
Foreclosure extinguishes the mortgagor's right to redeem and is the remedy mainly in a mortgage by conditional sale under Section 58(c). Other mortgages typically lead to sale instead.
Is a mortgage the same as a sale of property?
No. A mortgage transfers only an interest as security; ownership stays with the mortgagor, who can recover the property on repayment.
What law lets a bank seize property without going to court?
The SARFAESI Act, 2002 allows secured creditors to enforce security in many cases without a court decree. This operates alongside the Transfer of Property Act.
This article is for general informational purposes only and does not constitute legal advice. Laws change and every situation is different; please consult a qualified advocate about your specific matter.
