FREE IMPORTANT JAIIB LAW NOTES 2022 | Mortgages and Its Types – JAIIB LRAB 2022
In this article, we will provide you an important topic that falls under the Syllabus of JAIIB LRAB 2022. You will be able to easily understand the topics by the end of the article. This is a form of JAIIB Study Notes 2022 through which you can revise the mentioned topic for the preparation of your Examination of JAIIB. We also provide the JAIIB Mock Tests, and Study Material JAIIB which cover the whole JAIIB Syllabus for 2022.
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So, let us start with the Meaning of Mortgages & then it’s types:
Meaning of Mortgages | JAIIB
Mortgages are loans that enable an individual to purchase a home or property, issued by mortgage lenders or banks. There are loans available that cover the full cost of a house, but it’s most common to receive a loan for about 80% of its value.
In the case of a mortgage, the home itself is the collateral. In other words, if the borrower stops making monthly payments to the lender, the lender can recoup its money by selling the house.
Indian Laws allow six types of mortgage loans-
Types of Mortgages | JAIIB
As per the Section 58 in The Transfer of Property Act, 1882
Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage-money, and agrees, expressly or impliedly that in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee.
Mortgage by Conditional Sale
Where, the mortgagor ostensibly sells the mortgaged property-
- On condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or;
- On condition that on such payment being made the sale shall become void, or ;
- On condition that on such payment being made the buyer shall transfer the property to the seller,
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The transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale:
PROVIDED that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document, which effects or purports to effect the sale.
Where the mortgagor delivers possession, or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee and authorizes him to retain such possession until payment of the mortgage money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest or partly in payment of the mortgage money, partly in lieu of interest and partly in payment of the mortgage money, the transaction is called a usufructuary mortgage and the mortgagee a usufructuary mortgagee.
Where the mortgagor binds himself to repay the mortgage money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage money as agreed, the transaction is called an English mortgage.
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A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuary mortgage, an English mortgage or a mortgage by deposit of title deeds within the meaning of section 58 is called an anomalous mortgage.
This is another kind of mortgage which is getting popular these day & we think, you should at least have an idea about it.
A reverse mortgage can be described as a loan in a nutshell. If you have considerable home equity and are over 62, you may be able to borrow against it in the form of a lump sum, a fixed payment, or a line of credit. The homeowner does not have to make loan payments with a reverse mortgage, unlike a forward mortgage.
Borrowers must pay off their entire loan balance when they die, move out permanently, or sell their homes. The lender must structure the loan so that it cannot exceed the property’s value as required by federal regulations. The borrower or the borrower’s estate won’t be held responsible for the difference if the home’s market value drops or if the borrower lives longer than expected because of mortgage insurance.
In order for the mortgage instrument to be valid, what conditions must be met?
In order to have a valid mortgage instrument, the conditions that should be fulfilled are:-
- It is a requirement that the mortgage deed be signed by the mortgagor,
- that it be attested by at least two witnesses, and
- that registration and stamp duty be paid according to the law.
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