Difference Between Mortgage and Charge


Main Difference

The main difference between Mortgage and Charge is that the Mortgage is on the immovable property while a Charge is on movable property.

Mortgage vs. Charge

A mortgage created by acts of the parties whereas a charge may be created through the act of parties or by operation of Law. A mortgage requires registration under the transfer of property Act, 1882, and a charge created by operation of law does not need registration, but a charge created by an act of parties needs registration. A mortgage is for a fixed term, whereas a charge may be in perpetuity. A mortgage is a transmit of an interest in a specific immovable property, whereas a charge only gives a right to receive payment out of a particular property. A simple mortgage holds personal liability unless excluded by express contract. In the case of a charge, no personal liability created. But where a charge is the result of a contract, there may be a personal remedy.


Comparison chart

A mortgage involves the transfer of ownership interest in a particular immovable asset.The charge relates to the security for securing the debt, by way of pledge, collateral, and mortgage.
A mortgage is the result of the act of parties.A charge is created either by the operation of law or by the act of the parties concerned.
Personal Liability
Generally, mortgage carries personal liability, except when excluded by an express contract.No personal liability created; however, when it comes into effect due to a contract, then personal liability may be created.
Need to be registered under the Transfer of Property Act, 1882.When the charge is an outcome of the act of parties, registration is mandatory otherwise not.

What is Mortgage?

A mortgage is a debt facility or instrument, secured by the guarantee of specified real estate property, that the borrower is forced to pay back with a predetermined set of payments. Mortgages are utilized by people and businesses to make large real estate purchases without paying the entire purchase price up front. Mortgages are also called “liens against property” or else “claims on property.” If the recipient or borrower stops paying the mortgage, the lender can foreclose. In a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a require or claim on the house should the home buyer default on paying the mortgage. In the term of a foreclosure, the bank may evict the home’s tenants and sell the house, using the income from the sale to clear the mortgage debt. Mortgages come in many forms. With a fixed-rate mortgage, the borrower pays the same interest rate for the life of the loan. The monthly principal and interest payment do not change from the first mortgage payment to the last. Most fixed-rate mortgages have a 15- or 30-year term. A fixed-rate mortgage is also known as a “traditional” mortgage.

What is Charge?

Charge obstructs the title of a property when there is a charge on the worth or asset; the asset cannot be sold or transferred. The charge is sustained on the asset by the lender to the borrower’s movable asset. In charge, the moneylender doesn’t get right to sell the property. There are two kinds of charges; fixed charges and floating charges. A fixed charge relates to a loan or mortgage of some kind that uses a fixed asset as collateral to secure loan repayment. Fixed assets that used as collateral in a fixed charge include land, machinery, buildings, shares, and intellectual property (patents, trademarks, copyrights, etc.). If the borrower defaults on his loan, the bank can sell the fixed asset and recover their losses. The borrower/debtor cannot dispose of the asset, and the borrower must hold the asset until the total loan repayment made. A floating charge relates to a loan or mortgage on an asset that has a value that changes periodically to secure loan repayment. In such a case, assets that do not have a constant value, or not fixed assets such as stock inventory used. In a floating charge, the lender has the freedom to dispose of the asset (for example, sell stock) in the course of normal business activities. If the lender defaults on their loan, the floating charge freezes and becomes a fixed charge, and the inventory left over from the time of default cannot be disposed and used as a fixed charge to recover the outstanding debt.

Key Differences

  1. The term mortgage refers to a form of charge, in which the ownership interest in a particular immovable property transferred. On the other side, Charge is used to mean the creation of right over the assets in favor of the lender, for securing the repayment of the loan.
  2. A mortgage needs compulsory registration under the Transfer of Property Act, 1882. Conversely, when the charge made as a result of the act of the parties concerned, registration is must, but when the charge made by operation of law, no such registration is needed at all.
  3. The mortgage is made out of the act of the parties concerned, while the charge is made either by the operation of law or by the act of the charger holder and charge creator.
  4. A mortgage carries personal liability, except when an express contract specifically excludes it. As against this, no personal liability created. Nevertheless, when the charge comes into executing due to a contract, then personal liability may be created.
  5. The mortgage is for a specified term. Unlike charge, which continues forever.


As a whole, the nature of charge gives security to the lender that the amount borrowed to the lender repaid. On the other hand, in the mortgage, the borrower is bound to pay the mortgage money or else the amount will realize by selling the asset, so mortgaged, but only by order of the Court, in a suit.