Legal & Documents
What is a Mortgage Deed?
The bank's charge on your home. And the kind that leaves no trace in the registry — created simply by handing someone your title deeds.
The short answer
A mortgage transfers an INTEREST in property to secure a loan. The lender does not own it — but they have a charge on it, and they can enforce it.
And here is what catches buyers: the EQUITABLE MORTGAGE.
Created simply by depositing the original title deeds with a lender. Often unregistered. Which means it may not appear on the encumbrance certificate at all — and it is no less binding.
The kinds of mortgage
| Type | How it works | Registered? |
|---|---|---|
| Simple mortgage | The borrower binds themselves personally to repay, and agrees the lender may sell the property on default. Possession stays with the borrower. | Yes |
| Mortgage by deposit of title deeds (EQUITABLE MORTGAGE) | Created by simply handing the original title deeds to the lender, with intent to secure a debt. No deed required. | Often NOT. This is the dangerous one. |
| English mortgage | The property is transferred absolutely to the lender, to be re-transferred on repayment. | Yes |
| Usufructuary mortgage | The lender takes possession and takes the rents and profits in lieu of interest. | Yes |
| Mortgage by conditional sale | An ostensible sale, which becomes void on repayment. | Yes |
The one to understand is the SECOND. Most Indian home loans are secured by an equitable mortgage — deposit of title deeds — precisely because it is quick and attracts less stamp duty. And because it need not be registered, it can be invisible.
The equitable mortgage — and why it hides
An equitable mortgage is created by the act of depositing the original title deeds with a lender, with the intention of securing a debt.
No deed. No registration. No entry at the sub-registrar.
Which means it may not appear on the encumbrance certificate.
And yet it is a valid, enforceable charge on the property — one that binds you, if you buy it.
So a seller can, in principle, show you a clean encumbrance certificate and a property that is nevertheless mortgaged.
How to find it — and it is one question
This is the single most useful question in Indian property due diligence, and it takes four seconds.
Because an equitable mortgage is created by handing the originals to the lender — the lender HAS them.
So if the seller can only show you photocopies, and cannot explain where the originals are:
You may have just found an undisclosed mortgage.
Ask. Then keep asking until you have seen the originals or been given a satisfactory account of where they are.
And the other searches:
- CERSAI. The Central Registry of Securitisation Asset Reconstruction and Security Interest. It records equitable mortgages, and it exists precisely because they were invisible. Search it.
- Encumbrance certificate — 30 years. It catches registered mortgages.
- Ask for the loan closure letter and NOC, if there was ever a loan.
- Ask the seller directly, in writing: "Is there any subsisting mortgage, charge or lien on this property?" Their written answer matters.
Getting a mortgage released — and the step people skip
You repay the loan. The bank returns your documents. Everyone is satisfied.
And the charge is still on the record.
Because releasing it is a separate step — a formal release at the sub-registrar, and removal of the CERSAI entry.
If nobody does it, the mortgage sits on the public record for years — and it stops your sale, in fifteen years' time, when a buyer's lawyer finds it and you have to go back to a bank you left in 2011.
1. RBI requires the lender to return your original documents and release the charge WITHIN 30 DAYS of full repayment — or pay you ₹5,000 for EVERY DAY of delay.
2. Then get a fresh ENCUMBRANCE CERTIFICATE a few weeks later, and CHECK the mortgage is actually gone from it.
The bank will tell you they released it. Sometimes the paperwork sat on a desk. The EC is the public record, and it is the only way to actually know.
A few hundred rupees. Ten minutes. And it prevents an entire, avoidable category of disaster.
Frequently asked questions
What is a mortgage deed?
An instrument creating a mortgage — the transfer of an interest in specific immovable property to secure a loan. The lender does not own the property, but has a charge on it and can enforce it on default.
What is an equitable mortgage?
A mortgage created simply by depositing the ORIGINAL TITLE DEEDS with a lender, with intent to secure a debt. No deed is required and it is often not registered — which means it may not appear on the encumbrance certificate at all. And it is no less binding. Most Indian home loans are secured this way, because it is quick and attracts less stamp duty.
How do I find a hidden mortgage on a property?
Ask to see the ORIGINAL title deeds. It takes four seconds, and it is the single most useful question in Indian property due diligence — because an equitable mortgage is created by handing the originals to the lender, so the lender HAS them. If the seller can only show photocopies and cannot explain where the originals are, you may have just found an undisclosed mortgage. Also search CERSAI, which exists precisely because equitable mortgages were invisible.
Does repaying a loan release the mortgage?
No — that is a separate step. Repayment gets your documents back; releasing the charge requires a formal release at the sub-registrar and removal of the CERSAI entry. If nobody does it, the mortgage sits on the public record for years and stops your sale when a future buyer's lawyer finds it.
What is the RBI rule on releasing a mortgage?
The lender must return your original property documents and release the charge within 30 DAYS of full repayment — or pay you Rs 5,000 for every day of delay. Then get a fresh encumbrance certificate a few weeks later and check the mortgage is actually gone. The bank will TELL you they released it; the EC is the only way to know.