Mortgage with Bad Credit but Good Income

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Mortgage with bad credit but good income

It is difficult task to manage a mortgage with bad credit even if you have a good or high income. Individuals with bad credit but good income will have to pay higher interest or may have to give more down payment than others who have a good credit score.

Interest Rate 1% per month. No advance, No Processing Fee, No file charge,No Hidden charges

Steps to follow to get a mortgage loan approved instantly with bad credit but good income:-

Can also see the article in the link of this title

Go through your credit report thoroughly and point out the errors because of which your credit score has come down. Practically there may be an overcharge by the bank for a previous loan that you refused to pay to the bank and later on the bank may have rectified the error but by that time your credit score went down because it was registered that you defaulted in your repayment schedule. So make sure to put this kind of mistake forward to your Bank Manager or loan provider.
Pay back all your current outstanding loans before applying for a mortgage loan. One of the very important aspects of Cibil score is credit limit. If a person has already exhausted or is very near in exhausting his credit limit than it is highly unlikely that a bank will extend any sort of further loan to the individual / applicant.
Do not keep applying for a loan at several places repeatedly that will bring down your Cibil score and reduce your credibility.
Applying for a mortgage loan the applicant can increase the amount of deposit/down payment than usual it will give an impression in the eyes of the lender that their loan amount is secure and there is less risk involved.
Take advice of experts in the industry who understand the inner and practical aspects in granting loan. They are financial advisors or loan brokers etc.
Apply for government loan schemes which some times cover the weaker section of the society and loan has to be granted to them even if they have bad credit score or no Cibil history.

Points to remember and be prepared if you are looking for Mortgage with bad credit :

Be prepared to pay a higher interest rate.
Be prepared to give a larger deposit.
Be prepared to pay some extra money in addition to the regular processing fee.

Mortgage with bad credit but good income -A realistic approach

All those who wish to seek, to mortgage their property and expand their business with that money need to understand that, it is not an easy task to get a mortgage loan for those who have a bad civil score or no credit history.

The only way a person can manage to get mortgage loan is traditional lending market or private financier also known as private money lenders aka private financiers.

Banks vs. Private Money Lenders vis a vis bad credit mortgages but with good income

Time: For getting a Mortgage loan from a Bank, this entire process of applying and getting approval may take several months in banks and NBFC’s. But in getting a mortgage loan from a private money lender can be very quick and can happen instantly in minutes.
Interest rate: Banks have a standard and fixed interest rate which can not be said to be a very high-interest rate when it is compared with private lenders who charge exorbitant interest rates. Which can be as high as 50 to 60 percent or more.
Project / Purpose/ Object: Private money lenders may give a mortgage loan by only deposits of the Title Deeds. Whereas the banks insist on several documentation like project files, guarantees by surety etc. Banks follow several rules on each and every aspect of the Loans whereas private money lenders may just rely on word of mouth and very little documentation.
Personal Relation: Grant of loans by Private Money Lenders are based on a relation between the lender and the applicant. And even after when a loan is granted, the relationship still goes on and is dependent upon the relations maintained between them. The tenure of the Loan can be extended on mutual understanding. In India this can not be lost sight of, that when Banks or NBFC’s grant loan it is also a relation between the bank manger and the applicant. And everything depends on the personal relation between them. From the very start of applying the loan to disbursal and thereafter, till return of the loan it is the personal understanding between them.
Mode of payment of Loan: Private money lenders are usually comfortable in giving the loan amount in cash as is the traditional informal lending practice, as is followed since decades. Whereas bank will and can only give money through bank account transactions only.
Cibil Score Check: Banks will never give money to an applicant without perusing the Cibil Score. Whereas the private money lenders may not give any importance to the Cibil Score.
Documentation: Banks have an enormous amount of documentation to be completed whereas private money lenders do not insist upon much of the documents. Entire mortgage loan documentation may get completed by only taking of cheques or simple contract attested by notary.

How to Improve bad Credit score for getting a mortgage loan?

Repay all outstanding: To improve Cibil score one must repay all major outstanding as mortgage loan is usually very high and impacts the total credit limit of the applicant.
Do not keep applying for loans in several banks: Applying in several banks and repeatedly can also impact the credit score negatively.
Don’t make a default / Give timely payments: Sometimes it does happen when there is a dispute between the bank and the borrower about the repayment schedule or interest rate, the borrower stops payment altogether. Whereas the right way is to keep paying the interest as per the demand of the bank and later ask for adjustment or reimbursement as the case may be.
Don’t opt for one-time settlement: One-time settlement with the banks may reduce the total amount of money that has to be paid but actually what it does is it reduces the credit score. And brings the applicant into a “No Loan Zone”.

Benefits of taking a loan from a private money lender than from a bank or NBFC

Quick payment (In one day also): Amongst several benefits of taking a Mortgage Loan from a private financier is that they can give money hand to hand in comparison with the banks which can take several months. Private financiers are in the capacity to give instant money for mortgages, loan against property etc.
No credit history check: Private money lenders do not insist on credit history or Cibil score and give Loans by word of mouth.
The mode of Payment of Mortgage money can be in cash or account to account or mixed as per the request or need of the applicant.
No project report required: Private money lenders do not insist on any project report or any sort of other report or file to see the bonafides and object of the loan or mortgage.
Liberal approach: Private financiers do these loan transaction with liberal approach than banks who follow only fix set of rules.
No processing fee.
In case of default by the applicant the recovery proceedings are slower and may take decades
Mortgages of property coming in the negative zone or where the document is unregistered can also get a mortgage loan with private financiers whereas the banks can straight away decline to give loan to theses kind of profiles.
Mortgage of disputed property: Private money lenders can give mortgage loans against a disputed property but a bank will not.

Benefits of taking loan from Banks or NBFC than private money lenders

Low-interest rate: Interest rate given by banks and NBFC’s are much lower than private money lenders who are also known as Loan Sharks.
Accounted Money: Banks and NBFC’s will give all money which is accounted and white which may not be the case with private lenders.
Builds Credit History/Cibil Score: If loans and mortgages are taken from Banks and Other Institutions then it helps in building good credit score and repute for other lenders or other banks but with private lenders it does not.
Fewer chances of hard recovery: Some of the Private money lenders take the services of Hard recovery agents but banks do not operate in that fashion.

Mortgage with bad credit but good income is possible but be realistic

It may sound very easy for those who are new to banking practice or finance sector or loan sector, that if they have a property they can take loan against that property, instantly or very easily but it is not so in practical application. In real world scenario, to obtain mortgage, a person must satisfy several essential ingredients to avail loan. And it really becomes difficult for those who have a bad credit score. These individuals are taken as high risk individuals or negative profiles for the lenders. Banks keep themselves away from these individuals. It is true that all the banks compete between themselves to give as much loan to their customers to earn interest. But this only applies to those individuals who come fit in their set standards and rules.

Step by step guide to obtain mortgage with bad credit but good income:-

or

How to obtain mortgage for those who have bad credit score or bad cibil or low credit score or no cibil history

Improve Credit score by applying Gold Loan or Silver Loan
Bring Spouse as Guarantor : Making a spouse, mother, father or any other as guarantor can help in getting an approval for mortgage, with the condition that the guarantor should be having a good income.
Apply personal loan and offer your property as security/mortgage

If a person does not fit in the criteria of availing a mortgage as this usually has a low interest rate than any other loan. The bank manager may give personal loan to the same person by keeping the immoveable property as a security. Technically the same will still be called a personal loan but the amount of loan availed will/can be higher, which can be as higher as several lakhs.

Practical aspect for mortgage with bad credit but good income:-

Financiers or banks are not interested in taking the property which is kept as mortgaged, banks do not lend money even if they is a secured asset given to them. Lenders deal in lending and taking interest for it, and that’s it nothing more and nothing less. Property is only security that secures them against their risk of loosing the money That is why good or high income is at least required when having bad credit, altogether.

Everything about a mortgage with bad credit with good income- Random Things

*During the mortgage a Mortgagor is not entitled to sue against trespasser for possession during continuance of usufructuary mortgage for a simple reason that in usufructuary mortgage the entitlement to retain possession is with mortgagee.

“Mortgagee” is a person who is receives security of immoveable property for the money lent.

*Even where a judgment-debtor executes a security bond in favor of the Judge of a Court for the due performance of any decree or order that may be passed against him, the decree holder does not thereby become the mortgagee it is only an undertaking to the Court for the breach of which contempt action can be taken against him.

*The term mortgagee in S.58 is large enough to include all persons living as well as fictitious capable of bearing rights and liabilities. So incorporated company can exercise right of private sale of mortgaged property without intervention of Court under the terms of mortgage.

*In a mortgage action the mortgagee is not bound to recognize a paramount title and implead such sons claiming paramount title over hypothecation but in certain circumstances the Court has the discretion to allow the mortgagee to implead person setting up a paramount title.

Lease back to

*Mortgage with possession mortgagor by same transaction Mortgagee can sue on rent note for eviction and recovery of rent

*Where mortgagee continued to be in possession of suit land as mortgagee for continuous period of not less than fifty years preceding 1-1-1970 date of coming into force of Kerala Land Reforms Act (1 of 1964), would be a deemed tenant under S.4-A(1)(e) of the Act. Increase in mortgage money, induction of co-mortgagee non defining of their shares would not alter situation.

*Merger of right of lessee and mortgagee Property mortgaged to tenant and possession given

Recitals in deed indicating that mortgagee had undertaken to surrender possession if loan amount was paid by mortgagor within specified time-Presumption of implied surrender of lease hold right could arise.

*A usufructuary mortgagee is a ‘landlord’ within the definition of Cl.(h) of S.3 of Rent Control Act (1961) and is entitled to claim possession of the pre- mises mortgaged for personal occupation under Rent Control Act.

Mortgage-money.

*Under the second paragraph of Cl.(a) the principal money and interest oif which payment is secured is “mortgage money.”

The “principal money” will include not only the principal money originally advanced but all amounts that may be added to it as if it were part of the principal money (e.g. the costs under S.72).

*Suit on mortgage bond and not on subsequent khata where principal amount with interest had been capitalized Amount shown in khata cannot be considered as principal amount.

*When there is a transfer of an interest in immovable property by mortgage, then all the advances of money which may have been made both prior to the date of mortgage or subsequent thereto would be covered by it. In such cases, one mortgage covers all such advances and the limitation runs from the date of the last advance so made.

*The Debt Relief Act 2 of 1116 in Travancore did not warrant the application of the principle that a mortgagor seeking redemption of the mortgage was bound to pay off other charges on the property under which money was due to the mortgagee and the mortgagor was entitled to redeem the mortgage on payment of the statutory percentage of the debt under the Debt Relief Act.

*A mortgage may be executed for the interest alone on a loan without the principal itself being secured.

*A mortgagee, in the absence of any contract to the contrary, is entitled to treat the interest due under the mortgage as a charge on the estate.

*Where there is no stipulation for interest express or implied, in the mortgage document, it cannot be claimed as part of the mortgage-money.

*Where there is no stipulation in the mortgage deed for payment of interest on the mortgage amounts and the mortgagee wants to claim interest on the mortgage amount by reason of subsequent letter written by the mortgagor the mortgagee obviously wants a fresh interest to be created in the mortgaged property for the first time. It cannot be created without a registered document. Interest cannot therefore be claimed on the basis of subsequent letter not registered under the Registration Act.

*The question whether the interest claimed is on any agreement to pay it in the mortgage bond depends upon the particular terms of the document.

*Deed of mortgage giving mortgagee right to recover only amount of principal by sale deed held did not create any charge for interest due thereon.

*Mortgage bond fixing date for payment of mortgage money. Payment of interest till such debt was paid provided for. Payment of interest till payment of principal may be implied.

*Where payment of interest till payment of principal is implied, post diem interest would be a charge on the property.

*Stipulation as to payment of interest without limitation as to period of its currency. In default of payment at end of each year creditors to be at liberty to treat interest as principal. Post diem interest granted.

*Principal and interest stipulated to be paid within one year. On failure property to be deemed to be sold for entire money. No post diem interest held was intended to be charged.

*Mortgage deed providing for payment of principal and interest within one year. Further covenant not to transfer property till payment in full of principal and interest. Contract held was to pay interest until payment. Interest held was recoverable as part of mortgage money and not merely as damages.

*Where there is no express or implied provision for post diem interest, the mortgagee may be granted interest technically as damages and the rate would be prima facie the same as that provided in the bond.

*Post diem interest as a reasonable rate might also be decreed under the Interest Act, 1839, though there may be no agreement express or implied, to pay interest.

*Expression “mortgage money” in Section 58(d) read with its definition in Section 58(a) does not include compensation for improvements effected by mortgagee.

*The expression “mortgage money” included cost of reconstruction and repairs to mortgaged property.

*Non-payment of consideration – Effect.

*A mortgagee without consideration will be a void transaction. Sale of property by A to B on assumption that title vested in A-B mortgaging back same property for full sale price-B and not A found to have title to the property. Mortgage is devoid of consideration and is unenforceable

*A mortgage would, in the absence of a covenant or stipulation to the contrary, be complete, i.e., the transfer of interest is effected, not when the consideration is paid or made good, but when the mortgage contract is entered into, regardless of whether and when the consideration is paid.

*Mortgage Consideration not paid by mortgage nor possession handed over by mortgagor Mortgage not rendered void or ineffective merely because mortgage fails to advance amount of money undertaken to be advanced. But if he sues on title, no decree could be passed in his favour, since he had not given any money he could not have asked for anything.

*Mortgage Non-payment of consideration to mortgagor Effect – Due execution of mortgage deed, proved. Nothing on record to show that mortgage deed was to become operative after passing of consideration. Non-payment of consideration by itself not ground to hold mortgage not enforceable.

*A mortgage is prima facie only a security for a debt and where the debt does not exist to any extent, the security cannot be enforced to that extent.

*In the case of a mortgage, the presumption would be in favor of immediate transfer of interest but this presumption is rebuttable.

*A provision in a mortgage deed that the mortgagor will make over the mortgage deed to the mortgagee upon payment of the full consideration does not amount to a contract that the mortgage was not to take effect until payment of the consideration.

*A mortgage of which the whole cash has not been paid is valid to the extent of the money advanced unless the mortgagor has expressly put an end to the mortgage.

*To the extent to which the money was not paid, there will be a failure of consideration.

*Where the mortgagee undertakes to pay the creditors of the mortgagor, there is no failure of consideration, if the liability of the creditors is cleared off and this is so even if the creditors forego their rights.

*Where the mortgagee undertakes to pay the creditors of the mortgagor, he must pay them within a reasonable time.

*Mortgagee not paying off mortgagor’s creditors within reasonable time. Mortgagor suffering damages Mortgagee is liable for same.

*Consideration not paid by mortgagee. Mortgagor can sue for compensation but not for specific performance.

**Suit

* Mortgagee not paying consideration by mortgagor for compensation. Measure of compensation is difference between amount stipulated and amount paid. Mortgagor is also entitled to any loss he may have sustained.

*Where under the terms of a simple mortgage the mortgagee deducts a certain sum of money from the principal sum of money to be advanced, towards the first year’s interest in advance, there is no reduction of the principal to that extent and the mortgagee would be entitled to interest on the entire amount.

*Usufructuary mortgagee undertaking to pay off prior mortgagee and obtain possession. On his failure mortgagor paying off and obtaining possession.

*Usufructuary mortgagee cannot claim possession from mortgagor.

*Usufructuary mortgage-Possession delivered Suit for declaration by mortgagor that there was no consideration as the mortgagee did not advance the amount and hence the mortgage transaction was void-Held suit was not maintainable-The validity of mortgage is not dependent upon passing of consideration. As soon as the deed is executed a transfer of interest takes place.

*Where the redemption of the prior mortgage was not a condition precedent to obtaining possession, the mortgagee was given a decree for possession on condition of his paying the mortgagor the amount payable to the first mortgagee.

*In the Punjab non-payment of consideration after demand avoids the mortgage unless the mortgagor condones the breach or the non-payment.

*Where the mortgagor admits receipt of consideration though in point of fact, he did not receive any, mortgage is not avoided.

*Where the mortgagor admits the execution of the mortgage by him but pleads that the document was executed by him to get out of the clutches of his creditors and was not supported by consideration, the burden of proving want of consideration for the mortgage bond lies squarely on the shoulders of the mortgagor.

*Mortgage without title.

*A mortgage of property to which the mortgagor has no title creates no lien on the property.

*If A mortgages land to B to which he has no title and subsequently acquires that property the mortgage will attach to the property.

*Mortgagee knowing of want of title to property mortgaged in mortgagor at time of mortgage

*Mortgages does not Title subsequently acquired attach to property.

*Mortgage of property without title. Mortgagor acquiring other property. Mortgagor cannot be compelled to make good to mortgagee out of that property for loss caused by want of title to mortgaged property.

*Under-tenure sold in certificate proceedings for recovery of cess. Purchase by patnidar. Subsequent mortgage of under-tenure by under-tenure holder Mortgagee gets no interest Release by patnidar Mortgagee is not endowed with any interest in property.

**Mortgage by person having voidable title.

*A person who has acquired property under a voidable title can himself give a good title in respect of that property to a bona fide purchaser or mortgagee from him who deals for value and has no notice of the defects in the title.

*If a suit brought by the other co-sharers for a declaration that the mortgage was not binding on their share is decreed, the property furnished as security for loan is evidently rendered insufficient and the mortgagee is entitled to see under S.68.

**Mortgage by co-owners.

*One of several co-owners, whether tenants-in- common or joint tenants, can ordinarily mortgage his share.

*A mortgage by coparcener of a joint Hindu family of joint family property, neither for a family necessity, nor for discharging an antecedent debt, is void in toto and is not binding even on his own share.

*Mortgage by sole coparcener Mortgagee is entitled to rely on his mortgage against all coparceners born subsequent to date of mortgage.

*Where a mortgage is executed by several Muhammadan co-owners the mere fact that some of them are minors and pardanashin ladies, who had not executed the deed in accordance with law cannot make the execution by the rest invalid. The mortgage would be valid and binding against the rest. The reason is that the liability of the mortgagors being joint and several the mortgagee can realize the whole of the debt from any one of them

**Mortgage by pardanashin women.

*Where the legal adviser of a pardanashin lady, obtains a mortgage from her. The Court is entitled and bound to examine the transaction with close scrutiny and strictly insist on the mortgagee showing that the client was fully aware of the meaning and effect of the deed and that the transaction was a fair and honest one.

*The circumstances under which a pardanashin woman agrees to mortgage property must be carefully examined in order to ascertain that she had independent advice, that the lady had sufficient intelligence to understand the relevant and important matters, that she did understand them as they were explained to her, that nothing was excluded and that there was no undue influence or misrepresentation.

*Where for want of explanation, a pardanashin woman does not understand that she was making her- self personally liable to pay the money borrowed under a mortgage, the mortgage does not bind her at all.

*Where the execution of a mortgage deed by a pardanashin lady is found not to be her mental or conscious act, there being no room for a semi-conscious act, the whole deed is affected and must be set aside. If those founding on the deed fail to show that the grantor intelligently understood the deed there is an end of the matter. The question of undue influence does not arise.

*The cloak of protection which the Court puts round pardanashin women is available to them not only in the cases of documents executed by them but also in the cases of transactions like creating a mortgage by depositing title deeds. Omission to record the certificate that documents were read out and explained cannot be lightly treated.

*Law no doubt, threw a cloak of protection round a pardanashin woman such as the defendant. Where it was found that her solicitor explained the first mortgage, and the mortgagee company’s solicitor the second one, her husband having been present on each occasion and nothing more was needed to prove free and intelligent execution of the two instruments by her it was held that the mortgagees were valid. The doctrine of law throwing a cloak of protection around a pardanashin woman could not be pushed to the extreme verge so as to demand the impossible.

**Mortgage by beneficiary under trust.

*A person having a beneficial interest in property, under a trust deed is competent to mortgage his interest.

*Mortgage by person incompetent to contract.

A mortgage by a minor who is incompetent to contract is void.

*Mortgage by minor. Creditor cannot recover money even under Ss.64 and 65 of the Contract Act.

* A mortgage by minor is incapable of founding a plea of estoppel.

*A mortgaging joint family estate as his own absolute property and also getting his minor brother, B’s signature by way of assent to mortgage. Mortgage held to be void so far as B was concerned.

**Mortgage by one person when binding on another.

*The guardian of a minor under the Hindu law can mortgage the minor’s property only in case of necessity and not otherwise.

*A guardian appointed under Guardians and Wards Act, 1890, can mortgage with the sanction of the Court and not otherwise.

*Mortgage by guardian appointed under Guardians and Wards Act without sanction of Court. Mortgage is voidable. Minor avoiding same has to restore any benefit he has received there under.

*A Hindu widow can mortgage her husband’s estate so as to bind the reversioners only in the case of necessity and not otherwise.

*Mortgage by Hindu widow – Reversioners not questioning same-Third party cannot question its validity.

*An executor or administrator may make a valid mortgage binding on the estate.

*A mortgage by a partner of a firm for the benefit of the firm will be binding on the other members of the firm.

* Where certain male members of a family governed by Muhammadan law mortgaged property belonging to themselves and to purdanashin members of the family the mere fact that the ladies left the management of the property in the hands of the males, does not show that the male members represented the female members in the transaction; it is not therefore binding on them.

*When the joint grant of lands as inam were in favor of a person and his nephew and not for the benefit of the joint family, then the brother of the nephew would have no right to mortgage the property in favor his uncle nor was the land partible amongst his brothers.

*Where the mortgagee is not aware that the mortgagor’s daughter for whose marriage the debt was alleged to have been contracted by her father by executing the mortgage was a minor aged 12, it cannot be said that the mortgagee’s object in lending the amount was unlawful or that the provisions of the Child Marriage Restraint Act were intended to be contravened, and hence the mortgage cannot be challenged as invalid or unenforceable.

** Mortgage in favor of minor.

*A mortgage executed in favor of a minor who had advanced the whole of the mortgage-money is enforceable by him or by other persons on his behalf.

*The fact that the minor may have had no power to transfer the mortgage money and may, on that ground be entitled to recover it back, is not a sufficient ground for holding that a mortgage in favour of a minor cannot be enforced against the property, although the minor may not be entitled to sue the mortgagor on the personal covenant to pay, and the advance, by reason of his incapacity to contract, may not be strictly by way of loan.

*Mortgage-In favor of minor. Minority of mortgages renders it void ab-initio.

**Simple mortgage-Possession

*The definition of simple mortgage in Section 58(b) of the Act merely speaks of the procedure and describes that species of mortgage.

*Possession remains with the mortgagor.

*In the absence of an express stipulation the rents and profits of the land belong to the mortgagor.

*The fact that possession subsequently passes to the mortgagee does not convert a simple mortgage into a usufructuary mortgage.

*The onus of proving what the transaction is by which possession passed to the mortgagee under a simple mortgage is on the mortgagor.

*When by a document, the transferors bound themselves to pay the advanced money to transferee and agreed that in the event of their failing to pay according to the contract, the transferee would be entitled to cause the properties to be sold and the proceeds of sale to be applied in payment of the advanced money, the transaction is simple mortgage and not guarantee within the meaning

*Mortgage deed providing that mortgagee should take possession if interest remained unpaid by due date and thereafter enjoy properties as usufructuary mortgagee. Position of mortgagee as simple mortgagee held was not changed.

*Loan advanced to be paid by mortgagor by particular date with interest. Deed reciting that possession was given to mortgagee, but not actually given Mortgage held to be simple one.

*Simple mortgage- Mortgagee let into possession in pursuance of contemporaneous oral agreement that mortgagee should go into possession in satisfaction of his claim for interest. Agreement held could be proved so as to preclude mortgagee from claiming interest.

*A executed a mortgage without possession expressly agreeing to repay the mortgage money with interest at a specified rate. In case of default the mortgagee was given two options namely either to recover the money with interest calculated at a higher rate or to get possession of the land in lieu of the principal money. If the mortgagee exercised the second option the interest was to cease to run. Held, that the mortgage was not an anomolus mortgage where no decree for sale could be passed but it was a simple mortgage in which a right of sale was deemed to have been impliedly given to the mortgagee.

*In simple mortgage the ownership and possession remains with the mortgagor and a lease granted by him during the pendency of a suit by the mortgagee for sale of the property is not hit by Section 52, T.P. Act.

*Lessee of a part of the property. Mortgage of the whole property to him. Lessee continuing in possession of the part leased. Mortgage is a simple and not a usufructuary one. Mortgage stamp duty has to be paid to the Governemnt.

(Case under Stamp Act.)

*Document reciting borrowing of money and mortgaging certain land and also promise to repay loan within a certain period- Document held to be a simple mortgage. Stamp duty payable as mortgage deed. AIR 1969 Manipur 23 (26). (Case under Stamp Act.)

*A mortgage is a transfer of an interest in specific immovable property as security for the repayment of a debt. In a simple mortgage what is transferred is a power of sale which is one of the component rights that make up the aggregate of ownership, the characteristic feature of mortgage is that the right in the property created by the transfer is accessory to the right to recover the debt. For a simple mortgage there must be a personal covenant either express or implied and in the absence of such a covenant the security is generally but not necessarily a charge.

*When the mortgage deed specifically referred to a simple mortgage it would not be open to the mortgagor to plead that there was a contemporaneous agreement under which the mortgagee was to take possession of the mortgaged property and was to be in occupation thereof in lieu of interest and hence was not entitled to claim interest.

*Recovery of debt – Suit for sale of mortgaged property. Mortgage however found to be in contravention of statutory provisions – Passing of simple money decree on ground of personal covenant for repayment of debt – Not illegal.

*Mortgagor executing simple mortgage. Thereafter selling part of mortgaged property to third person by registered sale deed. Registration takes effect from date of its execution.

*Simple mortgage can be by way of deposit of title deeds. However, mortgagee must explain that deposit of title deed was with a specific understanding that it is for purpose of creation of a mortgage An accidental possession of a document by itself does not bring about mortgage. Law does not stipulate execution of a formal deed in respect of simple mortgages However, general practice is to at least prepare a note as to deposit of documents, duly incorporating conditions, such as rate of interest and mutual rights and obligations of parties.

**Mortgagor binds himself personally to pay.

*In order to constitute a transaction a simple mortgage, the mortgagor must bind himself to pay the mortgage-money.

A personal liability to pay the mortgage amount is in each case a question of construction of the mortgage instrument.

*The personal liability may be express or may be a matter of implication.

*Even though there is no express covenant to pay the borrower remains personally liable to pay off the mortgage.

*Whether the mortgage is simple or by a conditional sale the mortgagor is bound by the contract in the first instance to pay the debt.

*A mere promise to pay contained in a mortgage deed does not import a personal liability, for such a covenant is to be found in every form of mortgage. The essential thing to see is whether the covenant creates a legal obligation which does not merely give the borrower the opinion of paying the loan amount and redeeming the security but also confers on the mortgagee a right enforceable against the mortgagor to realize his money otherwise than out of the mortgage security. Thus a promise to pay cannot be said to contain a personal covenant to pay if in the event of the mortgagor’s nonpayment it does not give the mortgagee the remedy of enforcing the promise to pay.

*The definition of simple mortgage does not by itself exclude personal liability of the debtor and, indeed, the very act, of taking a loan or incurring a debt would without more, imply a liability to pay and unless this liability in some permissible manner excludes the personal liability the debtor or the obligee can scarcely be heard to say that he is not personally liable.

*In considering the question whether there is a personal liability to pay, it must be borne in mind, (1) that a loan prima facie involves such a personal liability, (2) that such a liability is not displaced by the mere fact that security is given for repayment of the loan with interest, but (3) that the nature and terms of such security may negative any personal liability on the part of the borrower.

*A personal covenant to repay the mortgage money must be presumed to exist in all mortgages unless there is something in the nature or terms of the mortgage to negative it.

*Unregistered mortgage- Mortgagee to remain in possession and enjoy rents and profits in lieu of interest. Mortgagor promising to pay principal after two years and in default mortgagee to continue in possession as before till redemption. Deed held did not import personal covenant to pay.

*As regards the terms of a document negativing personal liability, the general rule is that a covenant to pay the debt in a particular manner will exclude the general personal liability for such payment.(Lahangahan mortgage.)

*Mortgagor covenanting to pay debt out of hypothecated estate – Held, there was no personal covenant to pay.

*Where the mortgagor stipulated that he will pay the mortgage money on a particular date and that if the property was sold for arrears of revenue, then the mortgagee could recover from the person or other property of the mortgagor, it was held that there was no personal covenant to pay.

*Where the remedy provided in the mortgage was foreclosure of the mortgage in default of payment it was held that there was no personal liability.

*Where a mortgage-deed contained an express covenant to pay personally, the option given to the mortgagor of repaying the loan by selling the mortgaged property or a provision in the deed that the mortgagee would be entitled to bring the property to sale was held not to exclude the personal covenant.

*The words “we shall, on paying the money advanced, recover the property” interpreted as containing a promise to pay the amount.

*Even if there be no personal covenant to pay the mortgagor may become personally liable under Section 68.

* A suit to enforce the personal liability on the personal covenant to pay in a mortgage deed is not governed by Art. 132 of the Limitation Act.

*A mortgagee wishing to enforce the personal liability is not bound to sue also for the realisation of the security.

*A covenant to pay does run with the land and the assignee of the equity of redemption is not personally liable to the mortgagee for the amount.

**”Mortgagee shall have a right to cause the mortgaged property to be sold”.

*In a simple mortgage, the interest transferred is the right to have the mortgaged property sold in satisfaction of the debt.

*The agreement by the mortgagor that the mortgagee shall have a right to cause the mortgaged property to be sold, need not be express.

*Agreement giving right to mortgagee to cause mortgaged property to be sold may be implied from words used.

*Words of hypothecation generally import the right of the mortgagee to bring the mortgaged property to sale for the satisfaction of the claim.

*Document containing personal covenant to pay Other parts of document showing that there was no covenant: Held, this was no simple mortgage and mortgagee had no right to bring mortgaged property to sale.

*Mortgage of field. Same to stand mortgaged till payment of mortgage-money. Mortgagor to pay compound interest if repayment is not made within time Agreement that creditor might get land sold held was implied.

*The right to “cause the mortgaged property to be sold”, means a right to cause the property to be sold through the intervention of the Court.

*The mortgagee has a right only to cause the mortgaged property to be sold and not to claim possession of the property. A decree therefore which gives possession to mortgagee on default of payment is illegal.

*Suit for foreclosure by plaintiff on the basis of mortgage by conditional sale is a suit for recovery of money within S.4, Bihar Money Lenders Act and money advanced is a loan within S.2(f) of the Act S.4 therefore applies to such a case and if the plaintiff is an unregistered money lender cannot bring a suit.

*Mortgage suit – Mortgagee would normally be entitled to realise his entire amount from any and every bit of the mortgage property. The property cannot be apportioned pro rata between ancestral and non-ancestral character of land mortgaged.

*The mortgagee by executing the sale deed of mortgaged property could confer no better title than what he had under the deed of mortgage.

**Mortgage by conditional sale.

*For a mortgage by conditional sale under Cl.(c) there must be an ostensible sale, i.e., a transaction which bears the appearance of a sale but is not really that of which it bears the appearance.

*The fact that the form of a transaction is that of a sale is not inconsistent with its being construed as a mortgage by conditional sale.

*In a mortgage by conditional sale, the mortgagor sells the mortgaged property to the mortgagee merely ostensibly and on a condition that on default of repayment of the mortgage money by the stipulated date, either the sale shall become absolute or that on such payment being made, the sale shall become void, or on a condition that on such payment being made, the buyer shall transfer the property to the seller. In other words, every mortgage by conditional sale is an ostensible sale containing all incidents of sale except that there is, in addition to the incidents of sale, one or the other of the stipulations referred to above embodied in the document.

*Where ostensible sale and condition for repurchase are contained in the document and factors suggesting mortgage by conditional sale outweigh factors suggesting sale with condition for repurchase transaction is one of mortgage by conditional sale. There is a presumption that the transaction is mortgage by conditional sale.

**Consideration for sale was almost equal to the price of the property. Amount was to be repaid between five and twenty years. Provision for reconveyance was to be binding on every person in whose possession the property would be found.)

*Mortgage deed-Interpretation – Clauses of deed consistent with express intention of making the ‘transaction’ a conditional sale with option to repurchase Held, the document was not a mortgage by conditional sale.

*When the following conditions are fulfilled then only a transaction can be treated as a mortgage by conditional sale. (1) that on default of the mortgage money on a certain date the sale became absolute, (2) that on condition of such payment being made, such sale shall become void and (3) that on such payment being made the buyer shall transfer the property to the seller.

*Mortgage by conditional sale. Pre-requisite Condition regarding payment of mortgage money as condition for transfer of property to seller must be embodied in sale deed itself. Every sale accompanied by agreement for re-conveyance of property would not constitute mortgage by conditional sale.

*If the conditions of (1) showing that there was a loan (2) which had been secured by executing a mort- gagee and that (3) the borrower ostensibly sold the mortgaged property on any of the conditions enumer- ated in S.58(c); are fulfilled then only the transaction is to be treated as a mortgage by conditional sale.

*Under S. 58(c) of the T. P. Act, a mortgage by conditional sale of the property takes the form of an ostensible sale with the condition superadded that it shall become an absolute sale on default of payment on a certain date or subject to proviso that the sale shall be treated as void and the property retransferred on payment being made.

*Mortgage by way of conditional sale or sale Transaction comprising of two documents – One document executed by owner as ostensible sale subject to condition that purchaser shall reconvey property on seller returning same amount. Other document executed by ostensible purchaser agreeing to reconvey property on receiving amount after stipulated period of five years – Condition for reconveyance was thus part of same document – Held, document was not hit by proviso to Section 58(c) and was transaction of mortgage by conditional sale.

*In a registered sale deed containing a condition to reconvey the land, the ostensible sale itself is a consideration for the agreement to reconvey the land; because the vendor would not have sold the land if the vendee had not agreed to reconvey it. The agreement to reconvey the land is therefore, valid; and when other requirements of S.58(c) are satisfied, the deed must be held as a mortgage by conditional sale and not an outright sale.

*The stipulation that the property should be reconveyed for the same price is also a circumstance to hold that it is a mortgage by conditional sale.

*The sale being merely an ostensible one, the mortgagor does not lose his title or the right to possess the property.

*There need not be a pre-existing mortgage transaction in order to create a mortgage by conditional sale. It is enough if the document is in accordance with the requirements of S.58(c).

*The word ‘ostensible’ in S.58(c) has two meanings; (a) that the object bears a certain form or appearance without suggesting that it is or is not that of which it has the superficial appearance and (b) that the object bears a certain appearance but is not really that of which it bears the appearance.

*When a mortgage is by conditional sale, it is the form of ostensible sale it has to take and if the sale is ostensible it must necessarily contain all the out- ward indicia of a real sale.

*Where the document purports to be mortgage only but says that on default of payment the land is to be regarded as sold, it is not a mortgage by conditional sale.

*There is no covenant to pay in a mortgage by conditional sale.

*The words “on a certain date” mean “on or before a certain date”.

*The fixing of a certain date for payment is an essential ingredient of the mortgage by conditional sale.

*The words “on a certain date” refer to the default in the second clause and not to the payment in the third and fourth clauses.

*Omission to fix a certain date for repayment of mort- gage-money is not fatal.

*The absence of the mention of a certain date is no indication that the transaction was not a mortgage.

*Where a document of ostensible sale executed after 1929 contained a condition that on payment the vendee should transfer the property to the vendor with absolute permanent rights and the condition as to repurchase was embodied in the document and there were other circumstances as to the price, the pre- existing creditor and debtor relationship the purchase of the stamp papers in the name of the transferor, etc. Held that the document was a mortgage by conditional sale.

*One Palani Moopan executed a document in favor of the 1st defendant for a consideration of Rs.4,000 on 28th May, 1946. The document was in the form of a sale deed but it contained a stipulation that the 1st defendant should reconvey the property to Palani Moopan on his repaying the amount of Rs.4,000 after 5 years and before the end of the 7th year. The patta was not transferred to the 1st defendant after the execution of the document by Palani Moopan. The kist for the land was also continued to be paid by Palani Moopan and after his death by his sons. Lastly the consideration for reconveyance was Rs.4,000 the same amount as the consideration for the original transaction. Held, that there were several circumstances to indicate that the document was a transaction of mortgage by conditional sale and not a sale with a condition for retransfer.

*The recitals in the document that the vendee shall have the right to alienate the property even before the expiry of the stipulated period fixed for the re-sale and on the expiry of that period neither the vendor nor his heirs shall have any manner of right over the property would show that the transaction is an outright sale.

*Where a property is ostensibly sold by a mortgagor to the mortgagee with a condition that on making payment by the mortgagor to the mortgagee and getting the sale deed executed and registered, the same shall become void, or on committing default in payment of the mortgage money on a specified date, the sale shall become absolute, or on condition that on such payment being made the buyer shall transfer tax property to the seller, the transaction is only a mortgage by conditional sale and it is not a sale out and out.

*The effect of proviso to Cl.(d) of S.58 is that if the condition of transfer is not embodied in the document which effects or purports to effect a sale, the transaction will not be regarded as a mortgage. In other words, there cannot be a mortgage by conditional sale when the agreement of sale and resale is embodied in more than one document.

*When the sale deed, the deed of reconveyance and the rent note were parts of the same transaction and the transaction was not one of mortgage by conditional sale, in suit for specific performance the Court could not relieve the plaintiff against the forfeiture clause. If the original vendor i.e., the plaintiff failed to act punctually according to the terms of the contract the right to repurchase would be lost and could not be specifically enforced. Refusal to enforce the terms specifically for failure to abide by the conditions did not amount to enforcement of a penalty and the Court had no power to afford relief against forfeiture arising as a result of breach of such a condition.

*Mortgage by conditional sale. Document executed by plaintiff due to enability to discharge simple mortgage. Property given as security sold to defendant under deed in question with right to repur chase within 3 years – Even though real value of property was much more it was sold only for amount that was due under simple mortgage Same consideration was fixed for reconveyance. Patta of land was not transferred immediately after execution of deed Defendant given liberty to get patta trans- ferred only after 3 years – Held, deed in question was mortgage by conditional sale.

*When one of the mortgagors transfers his share in the equity of redemption to the mortgagee there is no question of mortgage by conditional sale of that share because a mortgage by conditional sale presupposes that equity of redemption still subsists with the transferor. Such a concept is impossible when what is transferred is the equity of redemption itself.

*Where the deed was registered deed transfer- ring the property absolutely to the transferee and possession was also handed over, it was a sale deed. Even if there is recital that after 10 years, on payment of consideration the purchaser would result it to the vendor, in the absence of relationship of debtor and creditor, it would not be a mortgage by conditional sale.

*When the deed stipulated that after 2 years the vendor would pay the consideration and get re- conveyance of the property at his expense, but if he does not pay and get reconveyance, vendee shall en- joy the property absolutely and the land was not transferred in his name and no installments were paid by the mortgagor then it is transaction of mortgage by conditional sale under S.58(c).

*The mere fact that there is only one document embodying sale and purchase would not necessarily mean that it must be a mortgage and cannot be a sale. When there is a clear stipulation to repurchase, the price is very low, and there is also a stipulation to pay interest and absence of period of repurchase then the transaction is a mortgage by conditional sale.

*Sale deed and contemporaneous agreement to resale property for same sum executed between parties – Original seller whether could claim relief of redemption under S.58(c). Question left open Concern expressed by Supreme Court on increasing tendency in recent years to enter into such transactions in order to deprive the debtor of his right of redemption within the prescribed period of limitation.

*Where the recitals in the deed indicated that there no question of outright sale, nor was there a recital in the document that transferee was entitled to deal with the property as an absolute owner but repeatedly stated that sale was subject to a condition stated therein, it indicated that executor never intended to transfer the property absolutely and there was also a condition of repurchase embodied in the document itself, it was clear that the document was a mortgage- deed by conditional sale.

*Where the property was sold for discharging the debt and the vendee was put in possession as abolute owner it is a sale simplictor and not a mortgage by conditional sale. If another independent agreement was executed on the same day stating that the purchaser agrees to reconvey the property after receiving consideration within 3 years, then it is only deed of reconveyance. As there is no relationship of creditor and debtor between the parties, the Court has to rely only on the document.

*Mortgage by conditional sale-Proof – Transaction regarding sale and repurchase was embodied in a single document – It was stated therein that if defendant repays the sale consideration after 6 years and within 7 years of date of sale, party should recover without any obstructions – Document was described by parties as conditional sale – Market value of property in question was much more than the purchase value given in document – Evidence of party giving indication regarding intention of parties -Document could be a mortgage by conditional sale.

*Mortgage by conditional sale – Possession -Entitlement to-Plaintiff son of deceased executant of deed Plaintiff being one of heirs was entitled to get property released from conditional sale – Plain- tiff proved execution of deed by his fathers – Mortgagee failed to prove independent title – Mortgager therefore could be said to have accepted father of plaintiff as owner of suit property – Plaintiff thus, entitled to possession of suit property.

*If the condition of reconveyance is enumerated in document itself, then it has to be regarded as mortgage as provided under S. 58(c).

*Mortgage or mortgage by conditional sale Determination. Condition incorporated in the document was to the effect that in case mortgage money would not be paid within five years period, the document will be deemed as sale. If mortgage amount is returned within period of five years, then mortgage will be redeemed and if it is not so done, then document itself would be treated as sale. Understanding between parties to the document was clear. They intended to bring about mortgage- The amount was also referred as mortgage amount. Document not showing that parties intended to sell property in question by giving concession to owner to repurchase on certain conditions of Transaction would be mortgage.

*Mortgage by conditional sale. Condition relating to re-sale of property in sale deed itself by which mortgagor create mortgage of property with mortgages. Must be inserted as a condition precedent. In lack of such condition in sale deed or document of transfer, on the basis of subsequent or the separate agreement, such transaction could not be treated to be a mortgage by conditional sale.

*Mortgage by conditional sale. Plaintiff borrowed certain amount from defendant, executed mortgage deed and delivered possession of property. Condition in mortgage deed that on repayment of loan amount on completion of one year defendant would re-convey suit land to plaintiff. Mortgage can be said to be mortgaged by conditional sale and not usufructuary mortgage or an outright sale. Plaintiff entitled to decree for redemption of mortgage.

*Mortgage by conditional sale. What amounts to Mortgagee was a money lender. It was his practice to obtain document as sale deed from borrowers and to execute reconveyance agreement to secure loans given by him. Sale deed and rent note were never intended to be acted upon on terms they contained. Mortgagee never acted as owner on basis of sale deed. Rather tenants continued to pay rent to mortgagor. Agreement of reconveyance was not proved. Transaction cannot be termed as mortgage by conditional sale.

*In a case where there was no debtor-creditor relationship existing between the parties prior to the transaction in question, nor did they intend to create such relationship by executing the document in question, then the transaction could not be treated as the one being mortgage by conditional sale. It has to construed as the sale with a right to purchase.

*Mortgage sale with condition of repurchase Condition imposed in reconveyance deed that mortgagor shall pay Rs. 120 per annum to mortgagee and in the event it was not paid continuously for five years, deed would stand repudiated. Not penal in nature. Reconveyance deed stood repudiated as condition of repayment of Rs.120 per annum year to year was not satisfied for a continuous period of 5 years.

*Mortgage by conditional sale or outright sale Determination. Sale deed was executed by plaintiff as security for loan availed by her from appellant. Plaintiff was in possession of property. In such case neither S. 91 nor S.92 of Evidence Act would disable plaintiff from adducing oral evidence to explain transactions covered under sale deed.

*Mortgage by conditional sale. It is not sine qua non to embody condition of mortgage in sale deed.

If mortgage condition is incorporated in a separate agreement it would also fulfil pre-conditions of conditional sale.

*Mortgage by conditional sale. Sale deed containing condition regarding reconveyance of property in favor of plaintiff within 2 years of payment on same consideration. Deed was mortgage with conditional sale and not sale deed with condition of reconveyance.

*Mortgage by conditional sale. Sale deed executed between parties. Condition of repurchase was contained in separate deed. Original sale deed cannot be regarded as mortgage by conditional sale.

*Transaction, whether conditional sale or absolute sale. Determination – Language of deed clearly revealed that transaction contained in deed was mortgage by conditional sale. No specific condition of sale becoming absolute on non-compliance of condition of repayment of amount as stated in deed Specific condition to re-transfer possession of suit property on repayment of amount. Thus, transaction would be conditional sale and not absolute sale.

*Mortgage by conditional sale. Or sale. Determination. Plaintiff executed sale deed in favor of defendant handing over possession of suit property and same day executed agreement for reconveyance. Defendant thereby became ‘Kabjedar’ of suit property based on mutation entry effected by revenue authorities, enjoying property as absolute owner

*Claim by defendant that his signature on deed of reconveyance was obtained on blank paper, not palatable Due examination of document proved by witnesses. There reference of sale deed in agreement of reconveyance and both executed on same day held, transaction was not mortgage by conditional sale but an out and out sale in favor of defendant.

*Mortgage by conditional sale or outright sale. Determination. Pleadings. Respondents specifically pleaded that transaction between themselves and appellant was one of mortgage. In written statement, appellant maintained a blissful silence in relation thereto. He did not even mention that understanding of respondents, or facts pleaded by them, as to what transpired between themselves and appellant, were not true. Failure of appellant to deny averments made in plaint as to character of transaction and as to what transpired between parties, and to plead any specific case to contrary would preclude him from ascertaining that transaction does not fit into S. 58(c) of Act.

*Mortgage with conditional sale or outright sale. Determination – As per sale-deed which according to vendor was document of mortgage by conditional sale, property was sold by vendor to vendee for consideration of Rs 50000/–In document of sale, entire ownership, right, title and interest transferred. No condition of S. 58 (c) in respect of mortgage by conditional sale found in document. Execution of rent note on same day would not mean that document of sale was not outright sale. Moreover, vendees were in possession of entire house except on ground floor which vendor was tenant – Held, transaction not mortgage and document of sale was never written as document of conditional sale.

*Conditional sale or mortgage-Deed executed in favor of defendants titled as conditional sale for a sum of Rs. 10,000/- Conditions in deed that if repayment is made within 5 yeras, defendants shall handover possession of the property in suit back to plain- tiffs Reflects that actual transaction between parties was of a loan and relationship of debtor and creditor existed. Therefore held that deed in question is a mortgage by way of conditional sale.

*Sale or mortgage by conditional sale. Distinction between Transferor taking loan from transferee for running his business and executing mortgage deed Subsequently further sum was taken for repaying that loan and also for running business Delivery of possession given to transferee stating that if transferor fails to repay the amount within six months the deed shall be treated to be abso- lute sale deed-Both transactions incorporated in one deed – Held, it was not sale deed but mortgage on conditional sale.

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