INTRODUCTION

Mortgage is a debt instrument by way of which an encumbrance or

claim can be created on an immovable property like land or building,
etc.
It delivers the conditional right of ownership over a property (real
estate) by its Mortgagor (Owner) to a Mortgagee (Lender) as
collateral for a loan.
In this transaction, the owner of the property becomes the debtor
and the person providing the loan is regarded as the creditor.
The debtor, over a fixed period of time and predetermined set of
payments, has to repay the loan, with interest. In cases of default in
payment of mortgage by the borrower, the creditor may seize the
mortgaged property in place of the loan. This is know as foreclosure.
Example: An apartment buyer pledges his house to the bank. This
gives the bank a claim over the house and it may, in case of default
of payment, evict the tenants of the house and sell it to clear the
debt.
 DEFINITION

Section 58 of the Transfer of Property Act, 1882 defines
mortgage as follows

A mortgage is the transfer of an interest in specific

immoveable 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
which may give rise to a pecuniary liability.

The transferor is called a mortgagor, the transferee a

mortgagee; the principal money and interest of which payment
is secured for the time being are called the mortgage-money,
and the instrument (if any) by which the transfer is effected is
called a mortgage-deed.
 ESSENTIALS

Following are the essentials of mortgage that can be inferred from the
aforementioned definition provided in the Transfer of Property Act

1. Transfer of Interest: As the owner of the property, the mortgagor

possesses all interests in it, however, this interest is reduced by the
interest transferred to the mortgagee when securing a loan. The
mortgagees interest is terminated at once on fulfilment of his
obligations by mortgager.
2. Specific Immovable Property: Mortgage can only be made of an
immovable property, which includes land and things attached to land.
This specific immovable property must be distinctly mentioned in the
mortgage deed so that in case of failure of payment, the court can
grant a decree for sale of the mentioned property for repayment of
loan. The property must be specific in the sense that it can be
identified by its size, location, boundaries, etc.
 ESSENTIALS

3. To Secure Payment of Loan: The basic aim of mortgage is to secure
payment of loan or performance of contract resulting in pecuniary
obligation. Transfer of property for any other purpose will not amount
to mortgage. Mortgager has a right to restore or regain the mortgaged
property on repayment of the loan or performance of the obligation.
4. Distinguished from Sale: In sale, all rights vested in the mortgagor
are transferred to the purchaser, whereas in mortgage, only some
specific interest is parted with by the mortgager, which can be
reclaimed on fulfilment of his obligations.
5. Distinguished from Charge: Mortgage is created by a act of parties,
for a fixed term and requires registration as provided under the
Transfer of Property Act. A Charge, on the other hand, may also be
created by operation of law and in such cases does not require
registration. It may also be in perpetuity. As against mortgage, a
charge doesnt include transfer of interest, it only gives a right to
receive payment out of a particular property.