People often mortgage their houses to meet personal needs, start a business, or finance their children's education. However, without proper knowledge, you could find yourself in a difficult situation. It's crucial to be informed before signing any documents to mortgage your dream home. A mortgage deed is essential—a legal document that validates this entire process.
Property expert Pradeep Mishra explains, 'Signing a mortgage deed without understanding it could jeopardize your property. First, grasp the mortgage deed—there are two types. The first is usufructuary mortgage, where ownership remains with you, but usage and maintenance rights go to the lender. This means the lender can collect rental income until the loan is repaid. The second is a simple mortgage, where you hold the property, but the documents are retained by the lender. It's crucial to know which mortgage type you are entering before signing.'
Before signing any mortgage deed, ensure the validity of the property's documents. Check the title deeds and confirm the property is free from any previous loans or disputes. Obtain an Encumbrance Certificate, which indicates any outstanding loans on the property, to avoid future complications.
Pradeep Mishra further advises, 'All loan details, interest rates, and conditions must be explicitly stated in the mortgage deed. It's important to know if the interest rate is fixed or variable. Understand how changes might impact your EMI. Also, check if there are any penalties for early repayment.'
Clearly define the loan term and repayment schedule in the mortgage deed. Understand the lender's rights if you cannot repay on time—can they seize the property?
Once you repay the loan, ensure to collect all documents back from the lender and obtain a No Dues Certificate, proving full repayment. Retrieve the title deeds and update property records once the mortgage ends.
The mortgage deed must clarify how disputes will be resolved, whether through mediation or court, ensuring property safety during legal notices or lawsuits.
Prepare the mortgage deed on non-judicial stamp paper and register it at the Sub-Registrar's Office. If not registered, it won't have legal validity and might lead to future disputes. Signing a mortgage deed can significantly impact your future, so gather full knowledge, review documents, and never sign without understanding all conditions fully.
