In the realm of real estate financing, mortgages play a crucial role in securing loans against properties. Two common types of mortgages are Equitable Mortgage and Registered Mortgage. While both serve the same purpose of providing security to lenders, they differ in their legal implications and registration processes. Let’s delve into the differences between Equitable Mortgage and Registered Mortgage to understand their distinct characteristics.

Equitable Mortgage

An Equitable Mortgage is created by depositing title deeds of the property with the lender as security for a loan. Here are some key features of Equitable Mortgage:

• Nature of Security: In an Equitable Mortgage, the lender obtains security over the property based on the deposit of title deeds. However, the lender does not have legal ownership of the property.
• No Formal Registration: Unlike Registered Mortgage, Equitable Mortgage does not require formal registration with the relevant authority. The mortgage is created by the act of depositing title deeds with the lender.
• Less Formal Documentation: Equitable Mortgage typically involves less formal documentation compared to Registered Mortgage. However, it still requires a written agreement between the borrower and lender outlining the terms of the mortgage.

Registered Mortgage

A Registered Mortgage involves the registration of the mortgage deed with the relevant authority, such as the Registrar of Properties. Here are some key features of Registered Mortgage:

• Legal Ownership: In a Registered Mortgage, the lender obtains legal ownership or a charge over the property by registering the mortgage deed with the relevant authority. This provides the lender with stronger legal rights in case of default by the borrower.
• Formal Registration: Unlike Equitable Mortgage, Registered Mortgage requires formal registration of the mortgage deed with the Registrar of Properties. This ensures that the mortgage is legally enforceable and provides public notice of the lender’s interest in the property.
• Greater Legal Protection: Registered Mortgage offers greater legal protection to lenders compared to Equitable Mortgage. In case of default by the borrower, the lender can initiate legal proceedings to enforce the mortgage and recover the loan amount.

Conclusion

Equitable Mortgage and Registered Mortgage are two common forms of securing loans against properties, each with its own set of characteristics and legal implications. By understanding the differences between these two types of mortgages, borrowers and lenders can make informed decisions and choose the most suitable option based on their requirements.