Mortgage is a transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. Under Indian law, mortgage is defined in Section 58 of the Transfer of Property Act, 1882, which recognises six distinct types of mortgages with different legal characteristics.
Legal definition
The Transfer of Property Act, 1882, Section 58(a) provides the statutory definition:
Section 58(a): A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed.
The critical element in this definition is "transfer of an interest" — the mortgagor does not transfer ownership of the property but creates a charge or interest in favour of the mortgagee. The mortgagor retains possession and ownership, subject to the mortgagee's security interest.
Section 60 establishes the mortgagor's right of redemption — the right to require the mortgagee to re-transfer the mortgaged property upon payment of the mortgage money. This right has been held to be an absolute and indefeasible right that cannot be contracted away.
Registration: Under Section 59, a mortgage deed for immovable property where the principal money secured is Rs 100 or more must be a registered instrument signed by the mortgagor and attested by at least two witnesses. Equitable mortgages (by deposit of title deeds) are an exception to this registration requirement.
Types of mortgage
Section 58 recognises six types of mortgages in Indian law:
- Simple mortgage (Section 58(b)): The mortgagor binds himself personally to pay the mortgage money and agrees that if he fails to pay, the mortgagee may sell the property without delivering possession. The most common form for bank home loans.
- Mortgage by conditional sale (Section 58(c)): The mortgagor ostensibly sells the property on condition that the sale shall become absolute on default of payment by a certain date, or that the sale shall be void on repayment. If the condition is fulfilled, the property reverts to the mortgagor.
- Usufructuary mortgage (Section 58(d)): The mortgagor delivers possession to the mortgagee and authorises the mortgagee to retain possession and receive rents and profits in lieu of interest, or in payment of the mortgage money, or both. The mortgagee is not entitled to foreclose or sue for the mortgage money.
- English mortgage (Section 58(e)): The mortgagor binds himself to repay the mortgage money on a certain date, and transfers the property absolutely to the mortgagee, subject to the condition that the mortgagee will re-transfer upon repayment. Common in institutional lending.
- Mortgage by deposit of title deeds (Section 58(f)) — also known as equitable mortgage: Created by depositing title deeds with the creditor in specified cities (notified by state governments). This form does not require a written mortgage deed or registration. Widely used by banks and housing finance companies for home loans.
- Anomalous mortgage (Section 58(g)): Any mortgage that does not fall within the above five categories or is a combination of two or more types.
How courts have interpreted this term
The Supreme Court has addressed fundamental questions about the nature and enforcement of mortgages.
Narandas Karsondas v. S.A. Kamtam [(1977) 3 SCC 247]
The Supreme Court held that the mortgagor's right of redemption under Section 60 is an indefeasible right — it cannot be defeated by any contract or condition. Any provision in a mortgage deed that seeks to clog the equity of redemption (prevent the mortgagor from redeeming the property) is void. The Court observed that "once a mortgage, always a mortgage" — the transaction retains its character as a security, regardless of its form or nomenclature.
Pawan Hans Ltd. v. Aviation Employees Welfare Association [(2020)]
The Supreme Court clarified the distinction between a mortgage and a sale — the test is the intention of the parties. If the transaction was intended as security for a loan (with the right of redemption), it is a mortgage; if it was intended as an outright transfer of ownership, it is a sale. The Court held that the presence of a right to repurchase or repay distinguishes a mortgage from a conditional sale.
United Bank of India v. Satyawati Tondon [(2010) 8 SCC 110]
The Supreme Court addressed the enforcement of mortgages by banks under the SARFAESI Act, 2002 (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act). The Court held that banks have the right to enforce their security interest (mortgage) through the SARFAESI mechanism without approaching the court, subject to the borrower's right to challenge the action before the Debt Recovery Tribunal.
Why this matters
The mortgage is the foundation of India's housing finance system and one of the most common secured lending mechanisms in the country. Every home loan, every property-backed business loan, and every real estate development financing arrangement involves a mortgage. The Reserve Bank of India reported outstanding housing credit of over Rs 25 lakh crore as of 2025, virtually all secured by mortgages.
For borrowers, understanding the type of mortgage is critical. Most bank home loans are structured as simple mortgages or mortgages by deposit of title deeds (equitable mortgages). In a simple mortgage, default gives the bank the right to sell the property through the SARFAESI Act process. In an equitable mortgage, the borrower deposits original title deeds with the bank — which means the borrower cannot sell, further mortgage, or otherwise deal with the property without the bank's consent.
A common misunderstanding is that a mortgage transfers ownership of the property to the lender. It does not — a mortgage creates only a security interest. The borrower remains the owner and retains possession. Even upon default, the bank cannot simply take ownership; it must follow the prescribed enforcement process (through SARFAESI or a court decree). The borrower's right of redemption — the right to repay the loan and reclaim clear title — persists until the property is actually sold in enforcement proceedings.
Related terms
Related property instruments:
Related processes:
Related concepts:
Frequently asked questions
What are the types of mortgage in India?
Section 58 of the Transfer of Property Act, 1882 recognises six types: simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, mortgage by deposit of title deeds (equitable mortgage), and anomalous mortgage. The most common forms in modern practice are simple mortgage and equitable mortgage (deposit of title deeds), which are the standard mechanisms for bank home loans.
Does a mortgage need to be registered?
Under Section 59 TPA, a mortgage deed for property securing Rs 100 or more must be registered and signed by the mortgagor with two witnesses. The major exception is an equitable mortgage (mortgage by deposit of title deeds under Section 58(f)), which does not require registration or a written deed — it is created by the mere act of depositing original title deeds with the lender in a notified town.
Can a bank sell mortgaged property without going to court?
Yes. Under the SARFAESI Act, 2002, secured creditors (banks and financial institutions) can enforce their security interest by issuing a 60-day notice to the borrower, and upon default, proceed to take possession and sell the property without court intervention. The borrower may challenge the action before the Debt Recovery Tribunal under Section 17 of the Act. This mechanism applies to debts of Rs 20 lakh and above.
What is the right of redemption in a mortgage?
Under Section 60 TPA, the mortgagor has the right to require the mortgagee to re-transfer the property upon payment of the full mortgage money. This right is indefeasible — the Supreme Court in Narandas Karsondas (1977) held that any clause in a mortgage deed that clogs the equity of redemption is void. The right persists until the property is actually sold in enforcement proceedings.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.