Knowing the distinctions between equitable and registered mortgages is essential when applying for a loan with property as security. While both act as loan security, they differ in costs, procedures or legal ramifications. The main distinctions between an equitable mortgage and a registered mortgage are outlined here.
A more straightforward and less formal way to create a mortgage is through an equitable mortgage. This is how it operates:
Procedure and Record-keeping:
A registered mortgage, sometimes called a legal or formal mortgage, involves a more systematic and legally binding procedure.
Procedure and Record-keeping:
The below table highlights some of the key differences.
Particulars | Equitable Mortgage | Registered Mortgage |
---|---|---|
Formality and legal standing | An informal mortgage recognised by equity law based on the deposit of title deeds. | Formal, recognised by statute law, involving a formal agreement and registration. |
Cost and time | Faster processing, less expensive. | Registering a mortgage entails extra paperwork and is more expensive. |
Security and enforcement | Greater fraud risk and a worse legal position. | More secure, easily accessible to enforce and has a robust legal foundation. |
Public record | Maintains privacy by not being publicly recorded. | A registered mortgage ensures transparency by being publicly recorded. |
Depending on your needs and situation, you may decide between a registered mortgage and an equitable mortgage. Consider an equitable mortgage if you're looking for a quick, affordable fix and are okay with the informality of the process. However, a registered mortgage is preferable if you want robust legal protection and are prepared to pay the extra fees.
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Another name for an equitable mortgage is a mortgage deposited through title documents. As the name implies, an equitable mortgage is established in the lender's favour by the borrower. It involves depositing the title deed to real estate as security until the loan is paid back in full.
Under the terms of the registered mortgage, registration is required. Under the equitable mortgage, buying stamp paper is required. There is no registration required for an equitable mortgage.
It is regarded as reasonable to obtain a home loan if you can put down 30–40% of the entire cost of the property.
A registered mortgage is an official contract that is recorded with a government entity, typically a land registry, wherein the borrower promises their assets as security for a loan.
Go to the sub-registrar's office, the location of the mortgage registration. Submit the paperwork and cover the necessary costs to start the removal process.
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