Understanding the meaning of a mortgage without possession is essential for correct financing decisions. In a mortgage, you borrow money from a lender to buy a property and provide the same property as security in case you default. In this arrangement, a question arises—who will keep possession of the property until the loan is repaid? If you wish to retain possession of your property during the loan term, enter into a mortgage deed without possession.
Purpose and meaning of mortgage without possession
A mortgage without possession lets you secure a loan by offering your property as collateral without giving up its ownership or possession. For example, if you take up a Home Loan without possession, you can stay in the same house until the loan is repaid despite it being collateral. In case of a default, the lender can still sell the house and get the proceeds. The purpose of this mortgage is to allow you to retain control over your property during the loan term.
Axis Bank offers Loans Against Property against your residential and commercial properties where the possession stays with you. You can get a loan between ₹ 5 lakh and ₹ 5 crore depending on your eligibility and the value of your property. The tenure can be anywhere up to 20 years.
Parties involved in mortgage deed without possession
- Mortgagor: You, the property owner, who pledges the property as collateral. You can use the property until the loan term is completed.
- Mortgagee: The lender or financial institution providing the loan. The mortgagee has the right to sell the property if you fail to pay the loan.
Provisions of mortgage deed without possession
- Loan details: The mortgage deed mentions the amount borrowed, the interest rate, and the loan repayment terms.
- Duration: The deed specifies the loan term and when the property will be released from the mortgage once the loan is repaid.
- Property description: The deed includes a detailed description of the property being mortgaged to ensure its identification.
- Covenants: These are promises you make, such as maintaining the property, paying taxes, and ensuring it remains free of legal disputes.
- Default clause: If you fail to repay the loan, the lender can take legal action, including foreclosure, to recover the owed amount.
- Rights of possession: While the lender doesn’t take possession immediately, they retain the right to do so in case of default.
Conclusion
A mortgage deed without possession offers you a way to get a loan for buying a house or land without giving up the ownership and possession of your property. When you choose a Mortgage Loan, ensure it has this feature. Also, check the mortgage deed's loan terms, covenants, and default clauses to know and protect your rights.
Also Read: What is a Mortgage Deed and why is it required?
FAQs
Q1. What is the indenture of a mortgage without possession?
An indenture is a legal agreement. Without permission, the indenture of a mortgage mentions the details and terms of the loan, such as the loan amount, interest rate, and rights of both parties.
Q2. What is the stamp duty on the indenture of a mortgage?
The stamp duty on a mortgage deed depends on your location and the loan amount. It is generally a percentage of the mortgage amount.
Q3. Is possession transferred in a mortgage?
In a mortgage without possession, possession of the property is not transferred to the lender. You retain control and use of the property unless you default on the loan.
Q4. Can there be ownership without possession?
Yes, ownership without possession is possible.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
