Legal Glossary · Property & Security
Charge vs Mortgage: Meaning, Explained Simply (2026)
A charge and a mortgage both let a lender use property as security for a debt, so people often treat the words as the same. They are not. The core difference is simple: a mortgage transfers an interest in a specific immovable property to the lender, while a charge only gives the lender a right to be paid out of a specified property, without transferring any interest in it. This page explains both terms in plain words, the provisions behind them, a short example, when each is used, and the confusions that arise. This is general information, last verified October 2026, and not legal advice.
- Mortgage: transfers an interest in a specific immovable property to secure a debt.
- Charge: a right to be paid out of a specified property, with no transfer of interest.
- Law: Section 58 (mortgage) and Section 100 (charge) of the Transfer of Property Act, 1882.
- Creation: a mortgage is by act of parties; a charge can arise by act of parties or by operation of law.
- Rule of thumb: every mortgage is a security, but not every security is a mortgage.
01What a charge and a mortgage mean
A mortgage is the transfer of an interest in a specific immovable property to secure a debt, while a charge is a right to receive payment of a debt out of a specified property without any transfer of interest in that property. Both are forms of security, but only a mortgage transfers an interest.
In plain terms, a mortgage gives the lender a piece of the ownership rights in the property until the loan is repaid. A charge does not. A charge simply says: if the debt is not paid, the lender can have it satisfied out of this particular property, but the lender does not hold an interest in the property itself.
Why it matters
The difference affects what the lender can do on default, how the security is enforced, and how it ranks against other claims. A mortgage, being a transfer of interest, generally gives stronger rights. A charge is often created by operation of law or by act of parties where a full mortgage is not intended.
A mortgage transfers an interest in the property; a charge only creates a right to be paid out of it. That single difference drives most of the consequences.
02When each applies
Both appear often in lending, but in different ways:
- Mortgage: used when a borrower pledges a specific immovable property, such as a house or land, for a home loan or a business loan. The Transfer of Property Act, 1882 recognises several kinds, including simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage and mortgage by deposit of title deeds.
- Charge: can arise by act of the parties or by operation of law. Examples include a charge created to secure maintenance, a charge under a decree, or a charge a company creates over its assets that is registered with the Registrar of Companies.
A useful rule of thumb: every mortgage creates security, but not every security is a mortgage. Where there is no transfer of interest, only a right to payment out of identified property, it is a charge.
03A simple Indian example
Suppose a person takes a home loan and signs a mortgage over the flat, depositing the title deeds with the bank. Here an interest in that specific immovable property passes to the bank as security. If the loan is not repaid, the bank can enforce the mortgage against the flat.
Now suppose a court, while deciding a family dispute, orders that a certain property shall stand charged for the payment of maintenance. No interest in the property is transferred to the person entitled to maintenance. They only get the right to have the maintenance paid out of that property if it is not otherwise paid. That is a charge, not a mortgage.
04The law behind charge and mortgage
In India both are defined in the Transfer of Property Act, 1882. Section 58 defines a mortgage as the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced, and it describes the different kinds of mortgage. Section 100 defines a charge: where immovable property of one person is, by act of parties or operation of law, made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property.
For companies, charges over company assets are registered with the Registrar of Companies under the Companies Act, 2013. The new criminal codes, the Bharatiya Nyaya Sanhita, 2023, the Bharatiya Nagarik Suraksha Sanhita, 2023 and the Bharatiya Sakshya Adhiniyam, 2023, do not govern this property topic, so their section numbering is not relevant. Always confirm any section against the bare Act.
05Charge vs mortgage at a glance
The table sets out the key differences.
| Point | Mortgage | Charge |
|---|---|---|
| Transfer of interest | Yes, an interest in the property passes to the lender | No transfer of interest; only a right to payment |
| How created | By act of parties, usually a mortgage deed or deposit of title deeds | By act of parties or by operation of law |
| Governing provision | Section 58, Transfer of Property Act, 1882 | Section 100, Transfer of Property Act, 1882 |
| Strength | Generally stronger security rights | Narrower; a right to be satisfied out of the property |
For the different kinds of mortgage and how they are enforced, see our notes on types of mortgage under section 58 and on redemption of a mortgage. A floating charge is a special company-law form of charge, explained separately.
06Where Claw fits
Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.
A reader who wants to see how courts have distinguished a charge from a mortgage, or how a particular document was read as one or the other, can look up those judgments on Claw. Claw lets you search across 30 crore+ judgments from 9,102 courts, benches and forums, with results in under 5 seconds, and its Legal GPT can show how Sections 58 and 100 have been applied. Coverage runs from the Supreme Court since 1950 and High Courts since 1990. Claw does not train on customer documents. You can create a FREE Claw account to read the case law behind these terms. Claw is a research tool, not a substitute for advice from your own advocate.
07Sources and further reading
Check the current text of the law before relying on it:
- India Code (official Acts, including the Transfer of Property Act, 1882 and the Companies Act, 2013): indiacode.nic.in
- Supreme Court of India (official judgments and rules): sci.gov.in
- Claw: clawlaw.in
This page is general information, last verified October 2026, and is not legal advice.
08Frequently asked questions
What is the difference between a charge and a mortgage?
A mortgage transfers an interest in a specific immovable property to the lender as security, while a charge only gives the lender a right to be paid out of a specified property, without transferring any interest in it.
What is a charge on property?
A charge on property means the property is made security for the payment of money to someone, by act of parties or by operation of law, where the transaction does not amount to a mortgage. The person holding the charge can have the debt satisfied out of that property, but no interest in it passes to them.
Which sections of the Transfer of Property Act deal with charge and mortgage?
Section 58 of the Transfer of Property Act, 1882 defines a mortgage and its kinds, and Section 100 defines a charge. Always confirm the exact wording against the bare Act.
Is every charge a mortgage?
No. Every mortgage is a form of security, but not every security is a mortgage. Where there is no transfer of an interest in the property, only a right to be paid out of it, the security is a charge and not a mortgage.
What is the difference between a fixed and a floating charge?
A fixed charge attaches to a specific, identified asset. A floating charge hovers over a class of changing assets, such as stock in trade, and lets the company deal with them in the ordinary course until the charge crystallises on a default or winding up. A floating charge is a company-law concept.