In the 2026 financial and legal landscape of India, understanding the nuances of property security is vital for any borrower. When you apply for a 4 types of mortgage deeds, you aren’t just signing a simple paper; you are entering into a specific legal relationship defined by the Transfer of Property Act, 1882.
The type of mortgage deed you sign determines who keeps possession of the house, who gets the rental income, and how the bank can recover its money if you default. While Indian law technically lists six variations under Section 58, the industry primarily revolves around 4 types of mortgage deeds that every property owner should know.
1. Simple Mortgage Deed (Section 58(b))
The simple mortgage deed is the most common form of registered mortgage in India. In this arrangement, the borrower (mortgagor) does not give up possession of the property. You continue to live in your home or operate from your office while the bank holds a “charge” over it.
Key Features:
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Personal Liability: The borrower binds themselves personally to repay the loan.
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No Possession Transfer: You keep the keys and the right to use the property.
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Right to Sell: If you fail to pay, the lender (mortgagee) has the right to cause the property to be sold.
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Court Intervention: The lender cannot sell the property directly; they must obtain a court decree for a judicial sale.
Example: A business owner takes a business loan of ₹50 lakh and signs a simple mortgage. They continue running their factory as usual. If they default, the bank goes to court to auction the factory.
2. Mortgage by Conditional Sale (Section 58(c))
This is a unique and slightly more complex deed. Here, the borrower “ostensibly” (seemingly) sells the property to the lender. However, this sale is not absolute—it is wrapped in specific conditions.
The Conditions:
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If the loan is not repaid by a certain date, the sale becomes absolute (permanent).
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If the loan is repaid, the sale becomes void (cancelled).
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Upon repayment, the lender must re-transfer the property to the borrower.
Legal Note: Under the Transfer of Property Act, for this to be a mortgage and not an actual sale, these conditions must be contained within the same document that effects the sale.
3. Usufructuary Mortgage Deed (Section 58(d))
The term “usufruct” refers to the right to use and derive profit from another’s property. In a usufructuary mortgage deed, the borrower delivers possession of the property to the lender.
How it Works:
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Possession: The lender takes physical possession or the right to receive income from the property.
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Income Adjustment: The lender collects rents or profits from the property and uses that money to pay off the loan interest or principal.
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No Personal Liability: Generally, the borrower is not personally liable; the property’s income “pays” the loan.
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No Sale/Foreclosure: The lender cannot sell the property; they simply stay in possession until the debt is cleared by the property’s earnings.
Example: A farmer mortgages their orchard. The lender takes over, sells the fruit, and uses the profit to settle the debt. Once the debt is zero, the orchard returns to the farmer.
4. English Mortgage Deed (Section 58(e))
An English mortgage deed is often preferred by private banks and international lenders because it provides strong security and a clear “out” for the lender.
Core Characteristics:
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Absolute Transfer: The borrower transfers the property absolutely to the lender.
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Repayment Promise: The borrower binds themselves to repay the money on a specific date.
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Proviso for Re-transfer: The deed includes a condition that the lender will transfer the property back once the full payment is made.
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Possession: Unlike a simple mortgage, the lender technically owns the property during the tenure, though the borrower often remains in possession as a “licensee.”
Comparing the Types of Mortgage Deeds
Choosing between these four types of mortgage deeds depends on your financial goal and the lender’s risk appetite.
Why the Deed Type Matters for Your Loan
When you look for a mortgage loan against property, the deed type dictates your legal safety net. Most modern banks in India use a version of the Simple Mortgage or an Equitable Mortgage (Mortgage by Deposit of Title Deeds).
The latter is often preferred because it doesn’t require a bulky, expensive registration process, though it still falls under the broad category of types of mortgage deeds used in daily banking.
FAQs: Mortgage Deeds in India
What is the difference between a mortgage deed and a sale deed? A sale deed transfers ownership permanently. A mortgage deed transfers an “interest” in the property temporarily as security for a loan. Once the loan is paid, the mortgage deed is cancelled.
Is it safe to sign an English Mortgage? Yes, it is a standard legal practice. While it involves an “absolute transfer,” the law protects your “Right of Redemption,” ensuring the property must be returned to you once you pay the dues.
Which is the best mortgage deed for a business loan? Most businesses prefer a Simple Mortgage. It allows you to keep using your business assets (possession) while accessing the capital you need.
Can a lender sell my property without going to court? Only in specific cases, like an English Mortgage or if the power of sale is expressly mentioned under Section 69 of the Act. In a Simple Mortgage, a court-supervised sale is generally required.
What happens if I don’t register my mortgage deed? In India, a mortgage (other than an Equitable Mortgage) must be registered if the value exceeds ₹100. An unregistered deed may not be admissible as evidence in court, leaving both parties at risk.
Conclusion: Securing Your Financial Future
Navigating the 4 types of mortgage deeds is essential to ensure that your property—your most valuable asset—is protected while it works for you. Whether you are opting for a traditional simple mortgage or a more specialized arrangement, knowing your rights is the first step toward smart borrowing.
Contact us at CreditCares to discuss which mortgage structure fits your financial profile. Check your eligibility today for loans above ₹20 lakh and let our legal experts guide you through the loan against property documents required for a smooth approval!
