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What is an Equitable Mortgage? Can it be executed in any State?

It is derived from the term equity and equitable mortgage is a type of mortgage where the borrower offers their property as a security for getting a loan. The borrower does not transfer the ownership of the property to the lender. It is only creation of an interest in favour of the bank. In this type of mortgage the lender holds the property documents till the entire loan is repaid. If the borrower fails to do so, the Lender has the right to sell the property in an auction to recover the due loan amount. The lender has a claim over the property while the borrower still retains the legal title and possession. It is governed by the rules and regulations stated in the Transfer of Property Act 1882 section 58(f). The Borrower and Lender mutually agree upon the terms and conditions of an equitable mortgage agreement and there is no involvement of any third party.

Equitable Mortgage is available in Notified areas of the State. State Government notifies such areas through Gazette Notification.

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