What is a Mortgage Deed?
A mortgage deed is a simple written agreement between you (the borrower) and the bank or lender. It’s like saying, “I promise to pay back the money I’m borrowing to buy this property, and if I don’t, you have the right to take the property back and sell it to get your money.”
What are the important points that you should check in Mortgage Deed?
- Property Details:
A mortgage deed is a simple written agreement between you (the borrower) and the bank or lender. It’s like saying, “I promise to pay back the money I’m borrowing to buy this property, and if I don’t, you have the right to take the property back and sell it to get your money.”
2. Property Details:
There should be complete and accurate description of the property you are using as security for the loan and its legal boundaries.
3. Loan Amount and Terms:
This is very important of mortgage deed. So, you should carefully check how much money you’ve borrowed, the interest rate, and the schedule for repaying the loan (how much you pay each month and for how long).
4. Mortgage Clause:
This is the core of the deed. It states that you are giving the lender a security interest in your property. This means that until the loan is fully repaid, the lender has a claim on your property.
5. Lender’s Rights (in case of default):
In this clause it is outlined that what the lender can do if you fail to make your loan payments. This usually includes the right to foreclose on the property, meaning they can take possession and sell it to recover the outstanding debt.
6. Default and Remedies:
This section clearly defines what constitutes a default (like missing payments) and what actions the lender can take as a result.
7. Registration:
For the mortgage deed to be legally valid and recognized, it you should register it with the Sub registrar office. This creates a public record of the lender’s claim on your property.
Legal Validity:
For a legally valid Mortgage deed it must be: In writing and duly signed by the mortgagor and mortgagee. Executed in presence of two witnesses. Applicable stamp duty should be paid. Registered with the Sub Register.
Rate of Stamp Duty Applicable on Mortgage Deed in Maharashtra:
As per Article 40 of Maharashtra Stamp Act, 1958 the stamp duty on a Mortgage Deed made where Possession of Property is with Owner, who is Mortgagor in this case, is:
- If loan amount is less than Rs. 5,00,000/- the Duty is 0.1% of amount secured subject to minimum Rs. 100/- .
- If loan amount is above Rs. 5,00,000/- the Duty is 0.3% of amount secured and maximum Rs. 20,00,000/- stamp duty is payable.
Registration Fees Applicable on Mortgage Deed in Maharashtra:
Registration Fees are payable at 0.5% of amount secured subject to maximum Rs. 15,000/- are payable.
Illustration
We will understand the stamp duty calculation by following illustration: Mr. Rohit of Pune wants to mortgage his residential flat against loan of Rs. 1 Crore to State bank of India then calculations shall be as under:
A. Stamp Duty i.e. Rs. 30,000/-
B. Registration Fees i.e. 1,00,00,000 X 0.5% = 50,000/- or Maximum Rs. 15,000/-. Therefore, Registraion Fees will be Rs. 15,000/-
C. Total = A+B i.e. Rs. 45,000/-.
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