When you want to take a mortgage for a home, then you need to submit all the original documents to the bank with which you are associated. This is a kind of security activity performed by the bank to lend you the money as a mortgage to buy your own home. Before doing all this, you should have an idea about more than one kind of “home loan arrangement,” and each one of them will affect you differently. Check out this article in which you go through two types of mortgages: Registered and Equitable Mortgages that will quickly affect your mortgage.
A mortgage that you take is of many different types. The arrangement of these types is dependent on the parties that are involved. When you take a home mortgage, two primary parties are involved in this process: one is a loan borrower, and the other is the bank or any other finance company.
Equitable mortgage
Equitable mortgages or you can say that simple home loans are the most common loan agreement anyone at any time will come across. The word ‘equitable’ shows that this mortgage type is an unbiased and neutral arrangement.
Understanding Equitable mortgage
The bank makes deals for you when you take out a home equity mortgage. If you have any security, it offers to lend you some cash for a reasonable long time, like 15-20 years approximately. So in the case of a home mortgage, the security would be the house you are purchasing. Then this is your responsibility to supply the bank with” original title deeds” and “home or property ownership papers.” You get these documents back after you repay the full balance of the home mortgage.
You pass the charge on your house to the bank when you enter into an equitable mortgage with your bank. That ensures when you send the original paperwork to the bank, in the case of the default on your mortgage, you also permit them to keep your property. Upon completing the mortgage deal, you submit a commonly unknown paper, the “Title Deed Deposit Memo.” This memo is a report that contains a list of all the papers that you present to the bank. You will also need to mention that you presented the papers to the bank at your own will without any pressure.
Registered mortgage
A registered mortgage or licensed mortgage is one in which, if a client faces any event of defaults in the loan repayment, they will give full ownership and rights of the property to the bank or any other lending firms.
Understanding Registered mortgage
In some cases, if a client is unable to repay the mortgage on time, then he or she, as a creditor, will allow the bank or associated lending firm to own the property and do whatever they will be able to do. The bank will have much more rights to the property in this situation than a simple mortgage agreement.
Equitable Mortgage Vs. Registered Mortgage
A bank would generally look for an easy or equitable home mortgage deal. But they will also focus on a registered agreement in some circumstances. So let’s focus on how the two of them make a comparison with each other.
The Cost involvement
There is no registration of equitable mortgages. So, in this case, what you have to do is purchase a stamp paper and write a “title deposit memorandum” on it. According to the rough idea, the home mortgage value would easily cost the stamp paper by 0.1 percent to 0.2 percent of the home mortgage value. The approximate amount varies from state to state. These numbers related to the mortgage are negligible or small, but the expenses associated with registering an agreement are a little smaller than that.
When you sign an agreement, you have to call the office of the sub-registrar. The charges involved will be as high as 5 percent of the value of the home mortgage. Except in a few circumstances, banks also rely on a registered mortgage.
Rights of the Bank
The bank recovers the initial paperwork in an equitable mortgage loan and closes your home mortgage after you repay the home equity loan entirely. The proper formal process for recording the presentation or return of documents does not exist. The bank will place the property up for auction if default and repay the debt with the sales proceeds further without any hurdle. But if something odd happens, then there is a much profit on the transaction. The bank has to refund the extra money to you.
The exchanging of records in a licensed or registered mortgage is registered with a sub-registrar. This ensures that you have to inform the sub-registrar until you repay the full home mortgage, your bank will have rights on your property.
In probably three cases, the bank will save the rights.
- In some cases, the property comes under the dispute of two parties or more than two; then, the bank will have rights over the property and parties in this situation.
- The clients who apply for a mortgage will not be able to sell the property under the mortgage dubiously multiple times until the mortgage is recorded in the sub-registrar records.
- If defaulting happens, then it will automatically transfer the ownership of the property to the bank. After that, the bank is responsible for it, and they will do whatever they want to do with it.
Conclusion
The paperwork will be very clear and complete if you are purchasing a property on a registered mortgage. The sub-registrar provides all details of ownership and mortgage. So these details would keep your side safe from all other transactions if any case of disagreement happens.
Most home mortgages that borrowers take are equitable loans. If there is any chance of dispute or default action, the bank finds it out, focusing on the registered mortgage. So in this situation, a borrower has to pay more costs. So make your decision wisely, and in my opinion, it is best if you buy a home with precise ownership arrangements and a clear mind. In making agreements, keep all the documentation processes as clear and straightforward as possible.
If you are looking for expert advice and guidance, contact Aceland Mortgage.