Borrowing against a property
Mr. Fund was having a big house property in the hearts of the City. He acquired the same some 30 years back and now the value of the asset is 15 times more than the initial value at which it he purchased. He was having a business of his own and had already mortgaged the house for obtaining loan from banks.
He has became old and is after prolonged reluctance he agreed to transfer the property to his sons name Mr. Hill making him responsible for making future payments to the banks.
Whats meant by a mortgage?
The Transfer of Properties act 1882 defines the same as –
A mortgage is the transfer of an interest in a specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument by which the transfer is effected is called a mortgage-deed.
Mortgage is done generally to obtain loan by placing an asset as a security. If the person obtaining the loan is not able to repay back, the asset that which is kept as the security for obtaining it will be sold off to meet the interest and principal amount of the unpaid debt.
How to transfer a mortgage?
In this case the person responsible for making payments is Mr. Fund, he is assigning the same to his son Mr. Hill.
A new mortgage deed should be executed with the same bank which should specify that the initial deed between Mr Fund and the bank for mortgagee of the property shall stand cancelled and this new deed between Mr. Hill and the bank shall be held against future payments.
The deed should be properly stamped , the asset underlying should be revalued and should have witness signature and sign from notary public.