In the post war era, the banks have started lending on immovable property which includes lands, buildings, etc. the borrowers transfer the interest in property to the banks for obtains loan. On repayment of the debt, the immovable property is reverted to the borrower. The transfer of interest in specific immovable property for the purpose of securing loan is called mortgage. Mortgage is defined as the transfer of interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loans and existing or future debt, or the performance of an engagement which may risk to a peculiarly liabilities. The lending of money on real estate is not popular with the banks. The banks have to lock their funds in the loans having long term maturities. The loan on real estate lack liquidity. In case of default, there is no organized market where the property can be sold and the amount recovered to pay off the loans.
Real estates, on the face of it, appear to be sound security. However in some cases, the transfer of property may involve legal hindrances of succession. The bank then shall have to face difficulty in the recovery of advances.