Indian Real Estate

Registered Mortgage Vs Equitable Mortgage


03, December 2025

Hey guys, we are back with another interesting realty topic. Today, let's explore the difference between equitable mortgage and registered mortgage, their definitions, advantages, disadvantages, and pretty much their overview!

But before that,

What is a Mortgage?

A mortgage is a loan that banks or other financial institutions provide to home buyers. The property or the house which is brought used the same will be pledged or mortgaged to the bank/financial institution till the said "loan" is repaid fully.

Learn more about Mortgagors and Mortgagees here

Though the concept of mortgages is common to us, the ideas of registered or equitable mortgages might not be, so let's explore further...

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What is a Registered Mortgage?

A Registered Mortgage, also known as "Deed of Trust," is simply a formally written proof of transfer the borrower has to create a charge on the property under the authority or sub-registrar as a security for the lender.

A registered mortgage or deed of trust is a fully legal document that caters to both the lender and borrower. Once the borrower fully repays the amount of mortgage, he or she will be given back the "title deed" stating the ownership of the said property is with the individual. But if the borrower fails to repay the loan, the lender under legal protocols can take possession of the home or property.

This type of mortgage is mostly preferred by banks and lending organizations.

What is an Equitable Mortgage?

Equitable Mortgage or constructive mortgage like the Registered Mortgage is a transference of the property's "title deed " to the bank or lender organization as a security and creating a charge for the same.

However, Equitable Mortage( also known as an equated mortgage in some circles), unlike the former, does not have any legal procedure whilst undertaking.

Equitable Mortgage but has some advantages like,

1) The Stamp charge incurred is way lower than that of a registered mortgage

2) In the case of registered mortgage, the stamp charges have been paid twice in some states, that is, while creating the mortgage and also during the closure of the mortgage.

3) As mentioned earlier, to create an equitable mortgage, neither the borrower nor the lender has to approach a registration office or undergo administrative/legal procedures.

4) Thus, equitable mortgages are far easier and economical

What are the advantages of a Registered Mortgage?

As stated earlier, Registered Mortgages are preferred by the banks as it is backed up legally through the sub-registrar's office too. This prevents the borrower from engaging in any fraudulent practices like selling the property to a third party without closing the full payment. The new buyers might be unaware of the trap; thus, both they and the lenders will be subjected to a painstaking and stressful legal battle over the ownership. Because of the legal backup, registered mortgages also discourage fraudulent creditors and lending organizations from possessing the property illegally. Hence, registered mortgages are seen as a more viable option by the major banks in the nation.

Difference between Registered Mortgage and Equitable Mortgage:

Feature

Registered Mortgage

Equitable Mortgage

Legal Status

A registered mortgage is a formal legal document that establishes a security interest in a property. It is signed by a borrower (mortgagor) and a lender (mortgagee) and must be registered with the appropriate authorities.

An equitable mortgage is one that originates from a contract or agreement between the borrower and the lender. Although it is not a formal registered instrument, it is still legally binding in court. Equitable mortgages can form in a variety of methods, including the deposit of title deeds or a written agreement.

Registration

The Registration Act makes registration necessary. This implies that a registered mortgage must be legally recorded with the relevant registration authority.

Registration is not necessary for an equitable mortgage. This means that an equitable mortgage can be established by a contract or agreement without being formally recorded with the registration authorities.

Priority

Generally takes precedence over unregistered mortgages, which means it has a greater claim to the property in the event of default.

If certain circumstances are followed, such as providing notice to the succeeding mortgagee or taking possession of the property before the subsequent mortgage is registered, the previous mortgage may have priority over later-registered mortgages.

Enforcement

Can be enforced by legal processes and the sale of property.

Enforcement is more complex and might require court intervention (for example, notice, possession).

Transferability

Allows for free transmission to a third party. This means that the lender has the freedom to sell or assign the mortgage to anyone.

Certain restrictions may apply to transfers, such as providing notification to the mortgagor or gaining their consent. The parameters of the original agreement between the lender and borrower may also determine the transferability of an equitable mortgage.

Default

Lender can exercise the power of sale and recover the loan amount.

The lender may need to bring a lawsuit for specific performance or foreclosure.

Possession

In the event of default, the lender has the right to seize control of the property. This strengthens the lender's legal standing and allows them to take quick action to recover the loan amount.

Without a court order, the lender cannot often take ownership of the property. This process might be more time-consuming and complex because the lender must demonstrate their right to possession through judicial proceedings.

Foreclosure

A court-supervised sale is an option for foreclosure. This process entails selling the property at a public auction to recover the unpaid loan balance.

Foreclosure may prove more difficult and time-consuming. Legal actions are often required to establish the lender's right to foreclose and secure a court order permitting the property's sale.

Subrogation

Lender can be subrogated to the rights of a previous mortgagee.

Subrogation may be subject to certain limitations

Redemption

Mortgagor has a right of redemption until the mortgage is fully discharged

Mortgagor may have a right of redemption, but it may be subject to certain conditions

Also Read: Difference between Mortgagee and Mortgagor

Registered Mortgage Tips:

Stronger Security

A registered mortgage acts as a strong security measure by creating a public record of the lender's interest in the property. This visibility serves as a deterrent to borrowers considering selling the property without settling the loan, as any potential buyer will be aware of the existing mortgage. Furthermore, in the unfortunate event of default, the registered mortgage streamlines the lender's repossession process, resulting in a smoother and more efficient resolution than unregistered arrangements.

Lower Interest Rates

Lenders frequently offer lower interest rates on registered mortgages because of the increased security they provide. With a registered mortgage, the lender has a clear, recorded lien on the property, providing greater assurance of repayment. This lower risk for lenders results in better terms for borrowers, including lower interest rates. Equitable mortgages, which do not provide the same level of security and formal documentation, may result in higher interest rates to compensate for the increased risk.

Transparency

Transparency is an essential component of the registered mortgage process. Both the borrower and the lender benefit from a clear and transparent transaction by signing a formal mortgage deed and then registering it with a government agency. This documentation ensures that all mortgage terms and conditions are recorded and available to the rightful owners. The registration process provides additional clarity by establishing the mortgage's legal status and priority in the event of a dispute or default, fostering trust and confidence in the lending relationship.

Peace of Mind

A secure claim through a registered mortgage can provide a sense of security for both the borrower and the lender. The borrower is less likely to face legal disputes because the lender's claim is well-established and recorded. Similarly, the lender gains peace of mind because the registered mortgage allows for easier enforcement in the event of default. This assurance promotes a mutually beneficial relationship by instilling trust and stability in the lending process, resulting in financial security for all parties involved.

Professional Guidance

Seeking professional advice for the mortgage process is vital, usually via a lawyer or solicitor. These legal professionals manage all aspects, including property law, contract negotiation, and documentation. Their involvement provides an additional layer of protection for both parties, ensuring that the terms are fair and legally binding. Their expertise, which ranges from contract review to title searches, ensures that the mortgage transaction runs smoothly and legally.

Equitable Mortgage Tips:

Faster and Simpler

Creating an equitable mortgage is faster and easier than registering a registered mortgage. Typically, it is a simple process that includes the deposit of title deeds and a written agreement between the borrower and lender. Unlike registered mortgages, which require extensive documentation and legal formalities, equitable mortgages can be established quickly, making them an appealing option for those looking for a simpler and faster way to secure a loan against their property.

Flexibility

Equitable mortgages are flexible, making them ideal for smaller loans or short-term financing needs. Unlike registered mortgages, they do not require extensive paperwork or formal registration, allowing for faster processing. This flexibility is advantageous for borrowers seeking short-term financing or with small borrowing needs. Equitable mortgages offer a simpler alternative, allowing borrowers to access funds quickly without the complexities that come with traditional mortgage arrangements.

Informal Agreements

Informal agreements can be effective, especially in situations requiring a more relaxed and personal approach, such as transactions involving close family members. While these agreements lack the formality of traditional contracts, they are heavily reliant on the parties' mutual trust and understanding. They provide flexibility and convenience by allowing borrowers and lenders to tailor terms to their specific needs and circumstances, fostering a tone of collaboration and goodwill.

Confidentiality

Confidentiality is a significant benefit of equitable mortgages. Without public recordation, the existence of the mortgage remains unknown to third parties, protecting the borrower's privacy and financial affairs. This confidentiality is especially useful in sensitive situations where the borrower prefers to keep the mortgage arrangement private, such as business transactions or personal matters. Equitable mortgages provide greater secrecy and confidentiality than registered mortgage arrangements.

So, folks, that's pretty much difference between equitable mortgage and registered mortgage.

We hope you liked the article, do share your thoughts and other info in our comments section below!

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