Equitable Mortgage Vs Registered Mortgage 2024

The key differences between an equitable mortgage and registered mortgage are as follows:

Understanding the differences between equitable mortgage and registered mortgage will help you opt for the suitable mortgage type. Usually, lenders prefer a registered mortgage as it does not involve any risk. However, if you are an existing customer of the lending institution, and have a good relationship with them, you can also avail of an equitable mortgage. 

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Equitable mortgage meaning comes from ‘Equitable’ (derived from the word equity), which means the interest of justice. It is a simple contract between a mortgagor and mortgagee (lender and borrower herein). Under this type of mortgage, you borrow funds from the lender and provide the property documents to them. The ownership documents will remain with the lender until you completely repay the loan. This mortgage is usually offered for a time frame of 15 to 20 years, within which your property documents will remain with the lender.

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As the name suggests, a registered mortgage meaning the lender registers the mortgage on the property title with a sub-registrar under whose jurisdiction the property is situated. In a registered mortgage, apart from the borrower and the lender, a third party is involved. In this type of mortgage, you have to give the full right of the property to the lender voluntarily. The ownership of your property remains with the lender, and they can use or dispose of the property in case of default. You will be required to record your property mortgage at the sub-registrar office. The property’s ownership is transferred back to you on repaying the loan in full,.

An equitable mortgage does not involve a third party. Also, the terms and conditions are mutually agreed upon by the lender and the borrower. These reasons make an equitable mortgage cheaper in reaching the agreement than a registered mortgage. Equitable mortgage charges involve a stamp duty of just 0.1% to 0.2% of the current market value of the property. Sometimes the stamp duty can be as low as 0%. 

In conclusion, it is important for borrowers to understand registered equitable mortgages and the difference between both. Registered mortgages have higher fees. However, the ultimate choice between a registered mortgage and an equitable mortgage depends on the specific circumstances of the borrower as well as the lender. If you are confused, it is advised to consult a financial advisor or real estate expert for a better understanding of the pros and cons of both options and determine which mortgage type fits you the best.

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