Last updated 12 Nov 2026
A mortgage in India is a transfer of an interest in immovable property to secure a loan, governed mainly by the Transfer of Property Act, 1882. The law recognises six kinds of mortgage. In practice, banks and most lenders use two routes: a registered mortgage, or a mortgage by deposit of title deeds. This guide explains all six, how a lender takes security, and what you can do if you fall behind. It is general information, not legal advice. For a particular property, take advice from a lawyer.
You will meet these ideas whenever you take a home loan or a loan against property. Knowing them helps you read your agreement and ask the right questions.
The six kinds of mortgage
The six kinds of mortgage
| Kind | How it works in plain words | Where you may see it |
|---|---|---|
| Simple mortgage | You stay in possession and promise to repay. If you do not, the lender can ask the court to sell the property. | Less common in bank lending today |
| Mortgage by conditional sale | The property is sold on condition that it returns to you when you repay. | Rare in lending |
| Usufructuary mortgage | The lender takes possession and uses the income from the property in place of interest or principal. | Rare in lending |
| English mortgage | You transfer the property to the lender, who must transfer it back on repayment. | Used in some documents |
| Mortgage by deposit of title deeds | You deposit the original title deeds with the lender to create security. | Very common in bank loans |
| Anomalous mortgage | A mix of the above, or a form defined by the parties' agreement and custom. | Occasionally |
Which kind applies depends on how your loan papers are drawn. Your lender and its lawyer decide, and the method may also depend on the state.
How lenders usually take security
Most home loans and loans against property in India use a mortgage by deposit of title deeds, often with a registered mortgage deed or a memorandum recorded in the way the state requires. In some states a registered mortgage is needed. Ask your lender exactly which method applies to you, what stamp duty and registration it involves, and who pays.
The lender's lawyer checks the chain of title, the encumbrance certificate and the approvals before the loan is paid out. See home loan documents for the papers, and the glossary entries on mortgage and MODT.
Your rights as a borrower
- To know the full cost before you sign, through the Key Fact Statement.
- To receive a copy of the sanction letter and the loan agreement.
- To use and enjoy the property while you pay on time. The lender holds a charge, not the home itself.
- To repay early. For floating-rate loans to individuals for non-business purposes, RBI Directions bar a prepayment charge for loans sanctioned or renewed from 1 January 2026.
- To get back your original documents and a no-dues letter once you close the loan.
- To complain to the lender's grievance officer and then to the RBI Integrated Ombudsman.
The prepayment rule is in the RBI Pre-payment Charges on Loans Directions, 2025. For documents after closure, see how to get an NOC. For complaints, see borrower rights.
What happens if you stop paying
A missed EMI is first a matter of charges and credit score. If the account becomes a non-performing asset, secured lenders can use the SARFAESI Act, 2002. In broad terms it lets a secured lender give a written demand notice and, if the dues are not paid within the notice period, take possession of the secured asset and sell it, without first going to court. You have a right to respond to the notice and to challenge the action before the tribunal. Timelines and steps are set by the Act, and a lawyer should read the notice with you.
Selling the property usually clears the loan. If it sells for more than you owe, the balance belongs to you. If it sells for less, the lender may still pursue the shortfall. Read our guide on missed EMI consequences and, if you are in difficulty, talk to the lender early about restructuring or a one-time settlement.
Practical points before you mortgage a property
- Confirm who owns the property and that every co-owner agrees in writing.
- Ask for a legal check of the title, not only the lender's own check.
- Understand whether the charge also covers other debts, such as a later top-up on the same property.
- Keep receipts for stamp duty and registration.
- Never hand over originals except to the lender against a written receipt.
- Read the clauses on default, penal charges and what the lender may do after notice.
For charges on late payment, see penal charges.
Worked example
A family owns a flat worth about ₹80,00,000 and needs a business loan. It applies for a loan against the flat. The lender asks the family to deposit the title deeds and sign a memorandum of deposit. The flat stays with the family. If they repay the loan as agreed, the lender returns the deeds. If they default and the lender follows the SARFAESI route, the lender can sell the flat after proper notice. If it sells for less than the dues, the family may remain liable for the difference.
Frequently asked questions
Does the bank own my home when I take a home loan?
No. You remain the owner. The lender holds a charge over the property as security. Once you repay, the charge is removed and the lender returns your documents.
Is a registered mortgage always needed?
Not always. Many banks use deposit of title deeds, with a memorandum or registration where the state or the lender requires it. Your lender will tell you which applies.
Can a lender sell my property without going to court?
A secured lender can act under the SARFAESI Act after giving a notice and waiting for the period it sets. You can respond to and challenge the action. Get legal advice if you receive a notice.
Who pays stamp duty and registration on a mortgage?
The borrower normally pays, but amounts and rules differ by state. Ask the lender for the figure in writing before you sign.
Can I mortgage a property that is jointly owned?
Usually every co-owner must sign, and the lender checks everyone's share. Ask the lender about your case.
How do I clear the mortgage after repaying?
Ask the lender for a no-objection certificate and the return of your original papers. Where a charge was registered, ask for it to be removed from the records.
Related reading: Loan against residential property, Loan against property, Home loans, Missed EMI consequences, Loan settlement vs closure, Glossary: mortgage, Glossary: title deed, Borrower rights.