Skip to main content

How to Mortgage?

 
 

How to mortgage?

 

What is mortgage?

Mortgage is a method of securing the debt or money lent. Every creditor wants the money lent by him to be secure so that in case of the borrower's failure to repay the amount borrowed, he may rely on the security. In case of mortgage, a borrower transfers his interest  in an immovable property to the lender against which the loan is credited to him. The provisions relating to mortgage of property are contained under Sections 58 to 104 of the Transfer of Property Act 1882. Section 58 of the Act defines the meaning of mortgage and other related terms.

How to mortgage?

As per the provisions of the Act, mortgage means transfer of interest in an immovable property to the creditor to secure the payment of money lent. It is essential that both parties - the owner of the immovable property and creditor - should be living persons. In the creation of the mortgage, while transferring the interest, the owner delivers the original documents of title of his property which is mortgaged to the creditor or his agent with the intention of creating a security on the same in favour of the creditor. The immovable property, the interest of which is transferred to the creditor, must be specific in description with boundaries and should be easily identifiable.

Any person competent to enter into a contract can create mortgage. This excludes minors and people of unsound mind. Guardians of minors can create mortgage after obtaining permission from a Court. Joint owners of property, partners of firms, and a Kartha of a Hindu Undivided Family can also mortgage property. 

Overview of Mortgage Process:

1. After choosing a particular home loan provider, the perspective customer submits the application form to the housing finance institution (HFI) along with other relevant documents as required by it. These comprise documents to establish income, age, residence, employment, investments, etc. The customer also needs to hand over a cheque for payment of an up front (non-refundable) processing fee of about 0.5-1% of the loan amount to the HFI.

2. In the next stage, HFI validates the information provided by the customer on the application form. HFIs usually conduct checks on the residential address of the customer, the place of employment of the customer, and credentials of the employer. Some HFIs may insist on a personal interaction with the customer and perform a reference check on the references provided by the customer on the application form.

3. After due appraisal of customer profile, a sanction letter is issued which contains details such as loan amount, rate of interest, annual / monthly reducing balance, tenure of the loan, mode of repayment and general terms and conditions of the loan.

4. The customer is required to leave the entire set of original documents pertaining to the property being purchased with the HFI as security for the loan amount sanctioned. These documents remain in the custody of the HFI till the loan is fully repaid. Once the documents are handed over to the HFI, they send all the documents for a thorough legal scrutiny.

5. Prior to disbursement, the HFI also conducts a site visit to the customer's property to ensure that all construction norms have been properly adhered to. Once the HFI is satisfied that the property is legally and technically clear, it disburses the loan amount. The disbursement from the HFI is on the basis of the stage of construction of the property.

Until such time that the entire sanctioned amount is not drawn, the customer will pay a simple interest on the actual amount drawn (without any principal repayments). The EMI payments will commence only after the entire sanctioned loan amount is drawn.

Key Mortgage Process Terms:

Mortgagor - A person who transfers interest in an immovable property is called a mortgagor. Generally, a mortgagor would be a borrower who is the owner of the immovable property.

Mortgagee - The person to whom interest in immovable property is transferred is a mortgagee, the creditor or lender. The principle money and interest, the payment of which is secured, is called the mortgage money.

Mortgage Deed – It is the document executed by a mortgagor transferring interest in an immovable property to a creditor/ mortgagee. 
The mortgagee, after the payment of the money secured, is required to return to the mortgagor the mortgage deed and all the documents related to the mortgaged property. If the mortgagee is in possession of the property, he has to deliver back the possession  and execute all required documents at his cost. This right of a mortgagor is called redemption of mortgage.

Right of Foreclosure

Section 67 of the Transfer of Property Act 1882 gives the mortgagee the right to foreclosure or sale. This right of foreclosure is the mortgagee's right to obtain a decree from the Court to debar the mortgagor of his right to redeem the property, or to sell the property. The mortgagee can exercise his right of foreclosure in any of the following conditions:

  • When the mortgage-money has become due on the mortgagor,
  • Before the making of any decree for the redemption of the mortgaged property, or
  • Before the payment of the mortgage-money to the mortgagee.

Such a suit to obtain a decree in order to debar the mortgagor's right to redeem the mortgaged property is called a suit for foreclosure.

Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016 or Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

Popular posts from this blog

Rs 14,000 Crore worth of tax free bonds coming soon from NHAI , PFC

  NHAI, PFC file prospectuses, coupon rate not yet decided MORE debt investment options have opened up for investors with AAA rated tax-free bonds worth over Rs 14,000 crore lined up. The National Highway Authority of India ( NHAI ) and Power Finance Corporation ( PFC ) are offering Rs 10,000 crore and Rs 4,033.13 crore worth of tax-free bonds, respectively, as per prospectuses filed with the Securities and Exchange Board of India (Sebi). Of a Rs 5,000 crore issue by PFC, Rs 966.87 crore has already been raised through private placement on September 28 and November 1. Tax-free bonds give investors tax-free return on any amount invested. In another kind of bonds, the long-term infrastructure bonds, investments up to Rs 20,000 are tax exempt, that is this cap amount can be deducted from the taxable income. Accordingly, the NHAI prospectus has clarified that only the amount of interest from -and not the actual investment on -its new bonds will be tax-free. "NHAI's publ...

Change in Fund Manager for some of HSBC Mutual Fund Schemes

Buy Gold Mutual Funds Invest Mutual Funds Online Download Mutual Fund Application Forms Call 0 94 8300 8300 (India) However, this facility is only available to Unit holders who have been assigned a folio number by the AMC.   HSBC Mutual Fund has announced that the below mentioned schemes shall be managed by the new fund managers as stated in the table. The effective date will be July 02, 2012.   Amaresh Mishra 's will be Vice President and Assistant Fund Manager. Having done a Post graduate diploma in Business Management and Bachelor of Chemical Engineering, he has over seven years of experience in Equities and Sales.   Mr. Piyush Harlalka's designation shall be Vice President- Fixed Income. Qualified as a C.A., C.S. and holding M.B.A.( Finance degree), he has over six years of experience in Fund management and ...

How EEE and EET Tax affect Retirement Investments

  An important factor while choosing a financial product is its taxation , and for retirement savings, this is even more important as the sums involved are usually life-long savings. Here's a look at the current tax treatment of three major long-term retirement planning products, which are - Employees' Provident Fund (EPF), Public Provident Fund (PPF) and National Pension System (NPS). EPF The tax treatment is EEE, which means your money is exempt from taxes at the time of investment, accumulation and withdrawal. At the time of investment, the tax deduction is under the limit of section 80C of the Income-tax Act , which is currently Rs 1.5 lakh. Partial withdrawals are also tax-free if made after 5 years of continuous service. If withdrawals are made before 5 years of service, 10% tax will be deducted at source. Exceptions have also been provided for transfer of amount and conditions wherein the subscriber is unemployed for more than 2 months or the loss of job was beyond th...

Personal Finance: You can insure your wedding

But luck may not always be on your side. With the frequency of such attacks, as also other risks and unforeseen accidents growing, a wedding insurance is something you may want to look at if a marriage is being planned in the family. Event insurance plans like this is still in its nascent stages due to low awareness. And given the sacred nature of the ritual, nobody wants to discuss or think negative. But as wedding spends and risks grow, it makes sense to cover the potential monetary loss. The policy in those countries even covers the loss of the wedding ring, the wedding gown not reaching on time and even the expenses/loss due to late or non-appearance of the photographer which may mean staging the event once again for the photograph. In India, most insurance companies — including ICICI Lombard General Insurance, Oriental Insurance, Bajaj Allianz and National Insurance — offer wedding insurance. The policy is tailor made to individual requirements and needs. The sum insur...

DSP BlackRock MidCap Fund

Best SIP Funds Online   HOW HAS DSP BlackRock Small & Mid Cap Fund PERFORMED? With a 10-year return of 14.61%, the fund has outperformed both the category average (12.34%) and the benchmark (10%) by a good margin. Should you invest in DSP BlackRock Small & Mid Cap Fund? This fund invests predominantly in mid-cap stocks but takes a sizeable exposure in small-caps as well. The focus is on nascent companies with high growth potential. The fund manager places emphasis on quality and avoids inferior businesses even if these look tempting from a valuation perspective. Over the past year, the fund portfolio has grown, having added to some of the underperforming sectors like chemicals and healthcare. Its portfolio churn has come down significantly. The heavily diversified portfolio is run completely agnostic of its benchmark index— most bets are from outside the index—which can at times lead to bouts of underperformance as seen in the recent years....
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now