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Home Finance


 Home Finance Agreement

 Memorandum of Deposit of Title Deeds
 Facility Offer Letter along with repayment
 Title deed & Title supporting documents
Essential Elements to form a

 Parties & their Capacities

 Intention to create a legal relationship
 Offer and Acceptance
 Agreement on terms & conditions
Home Finance Agreement

 The duly executed document describes in

detail the undertakings, declarations and
agreements between the Bank and the
Customer the breach of which gives right
to them to go to the Court for remedy.
Memorandum of Deposit of
Title Deeds

 The Document serves as an instrument to

create Equitable Mortgage by the
customer with the Bank
Main Contents of the
 Confirmation by the customer of depositing the
title deeds of the property with the Bank
 Intentions of the customer to create equitable
 Giving reason of the mortgage as to secure the
financial obligations under the finance
 List of title documents & specification of the
Main Attributes of a Duly
Executed Document
 Correctly filled-in
 All the pages of finance agreement signed by the
customer obtaining finance (as per CNIC or bank a/c)
 All the pages of MODTD signed by the mortgagor (as per
CNIC or bank a/c)
 Left Thumb Impressions from male and right Thumb
Impression from female customer
 Complete witnesses (as per Qanoon-e-Shahadat)
 Signing of finance agreement (on behalf of the Bank) by
an official holding bank’s attorney

 Mortgage is a contract that should fulfill all

the requirements of a valid contract i.e.
 Mortgagor should not be a minor
 Lawful purpose
 Backed by consideration
 Free consent

It is the transfer of an interest in a specific

immovable 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 a financial obligation.
 The transferor is the Mortgagor
 The transferee is the Mortgagee
 The Principal money and mark-up of which
payment is secured are called the Mortgage
 The (registered) instrument by which the
transfer is effected is called Mortgage Deed
Legal or Registered
 The mortgagor binds himself personally to pay
the mortgage money
 Physical possession of property with the
 No power of sale out of court (only through
court decree)
 Effected through a registered document (even if
the consideration is below Rs.100/-)
 Attested by two witnesses
Equitable Mortgage
 A mortgage by deposit of title deeds is called equitable
 A title deed of a property is generally the document by
which the property is acquired and if a document other
than a title deed is deposited no valid mortgage can be
created. There is a difference between a document of
title and documents which are evidence of a title. A Sale
Deed in favor of the owner is a title deed but not a copy
of the Jamabandi/Fard An entry in the Jamabandi may
be an evidence of title but it is not a document of title.
Mortgage by Deposit of Title

 The document to be deposited should be

an original one through which the title to
the property in question was obtained. No
equitable mortgage can be created by
deposit of copy of the title document on
the plea that the original has been lost or
is not available for the purpose of deposit.
Sale Deeds and Transfer of
Allotment Letters
 Where the mortgagor holds original “Sale
deed” of the land, he may create a
mortgage by mere “deposit” of the title
deed with the mortgagee bank. And if he
does not hold sale deed, but possesses
the allotment rights of the property, he
may create a mortgage by a registered
instrument i.e. “registered mortgage
 The development authority, such as DHA, LDA,
CDA and the cooperative housing societies etc.
(“Authority”) issues allotments letters to an
allottee. These documents constitute only
evidence of “contractual obligations” between the
Authority and the holder of the Allotment Letter.
As long as the Authority has not transferred the
property to the allottee by a registered sale deed,
the title in the property continues to remain with
the Authority.
 Even where the allottee himself (without
having obtained a registered sale deed
from the Authority), transfers his
allotment interest to another person by a
registered deed, such deed cannot be a
document of title to the relevant land for
the simple reason that the transferring
allottee himself holds no registered
“Transfer Deed”.
 An “allottee” cannot create an equitable
mortgage by the simple deposit of the
allotment letters, as the allotment
letters/transfer letters are not title
documents. Creation of security in favour
of financial institution is concerned it can
be created through a registered document
i.e. the mortgage deed.

Muhammad Kamran
Manager- Policy &
Compliance (Home Finance)
Bank Alfalah Ltd