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However, you can choose between an equitable mortgage and a registered mortgage. Confused? Donu2019t be. Today, in this article, we will focus on what each one means and the key differences between an equitable mortgage and a registered mortgage.
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What does equitable mortgage mean? • The lender and borrower mutually decide on the loan terms and conditions.
Understanding the working of equitable mortgage • The borrower transfers the property title deed to the lender. • A charge is created on the mortgaged property.
What does a registered mortgage mean? • Such a mortgage needs approval from the sub registrar's office.
Understanding the working of registered mortgage • A charge on the property is to be created with the sub-registrar. • The title is restored to the borrower after the successful loan repayment.
Registration and process • An equitable mortgage does not require registration, but a registered mortgage does. • The equitable mortgage requires purchasing of stamp paper. • For a registered mortgage, you need to contact the sub-registrar office.
Mortgage cost • Stamp duty for an equitable mortgage is between 0.1% and 0.2% of the property value. • Stamp duty for a registered mortgage is 5%.
Risk involved • An equitable mortgage is riskier than a registered mortgage.
Points to consider when choosing between these two mortgages • The registered mortgage gives the lender more power than the borrower. • The registered mortgage is less risky as both parties are bound by a legal agreement.
Always remember that a registered mortgage has a slight edge over an equitable mortgage.
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