The main characteristics of bank mortgage can be put as follows:
Characteristics of bank mortgage
- Mortgage relates to immovable properties. Properties mortgaged should be specified by the mortgagee in the mortgage deed. Such specification can be done by mentioning the name, location or size of the property.
- A mortgage is the transfer of an interest in the specific immovable property. Transfer of an interest in the property means that the owner transfers some of the rights of ownership to the mortgagee and retains the remaining rights with himself but he cannot sell the mortgaged property without the consent of the mortgagee.
- If there are more than one co-owners of an immovable property, every co-owner is entitled to mortgage his share in the property.
- The object of transfer of interest in the property must be to secure a loan or the ensure the performance of an engagement which results in monetary obligation. Thus, the property may be mortgaged to provide security to the creditor in respect of the loans already taken by the mortgagor or in respect of the loans which he intends to take in future. An existing overdraft can also be secured by mortgage of the property. But if a person transfers his property for a purpose other than the above, it will not be called a mortgage, e.g., a transfer of property in discharge of a debt is not a mortgage.
- Actual possession of the property need not always be transferred to the mortgagee.
- The mortgagee gets, subject to the terms of the mortgage deed and the provisions of the Transfer of Property Act, 1882, the right to recover the amount of the loan out of the sale proceeds of the mortgaged property.
- The interest in the mortgaged property is re-conveyed to the mortgagor on the repayment of the amount of the loan with interest thereon.
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