LOAN BOND WITH SURETY AND SIMPLE MORTGAGE OF PROPERTY
This Loan Bond is executed on this ______ day of ____________ at ____________, between:
1. Mr. X, s/o ____________, r/o ____________ (hereinafter called "the Debtor") of the First Part;
2. Mr. Y, s/o ____________, r/o ____________ (hereinafter called "the Surety") of the Second Part; and
3. Mr. Z, s/o ____________, r/o ____________ (hereinafter called "the Creditor") of the Third Part.
WHEREAS the Debtor has applied for a loan of Rs. ____________, which shall be repayable in instalments as specified hereunder, with interest at the rate of 18% per annum;
AND WHEREAS the Surety has agreed to give security for the above loan, and the Creditor has agreed to advance the loan on such security.
NOW THIS BOND WITNESSETH AS UNDER:
1. That in pursuance of the said agreement, the Creditor has advanced a sum of Rs. ____________ to the Debtor. The Debtor and Surety have jointly and severally agreed with the Creditor as under:
2. That the Debtor and the Surety are jointly and severally responsible for repayment of the above amount in four equal instalments, with interest, on a half-yearly basis, as under:
INSTALMENT | DUE DATE | PRINCIPAL AMOUNT | INTEREST
1st instalment | ________ | ________________ | ________
2nd instalment | ________ | ________________ | ________
3rd instalment | ________ | ________________ | ________
4th instalment | ________ | ________________ | ________
3. That in case of failure to pay any instalment, or part thereof, with interest, the entire amount along with interest shall become payable at once, and the Debtor and the Surety shall be jointly and severally liable to pay the same.
4. That for the consideration aforesaid, and in further pursuance of the aforesaid agreement, the Debtor and the Surety grant and transfer by way of simple mortgage to the Creditor all that property described in the Schedule hereto, which shall remain and be charged by way of simple mortgage as security for the payment to the Creditor of the said principal amount along with interest, in accordance with the covenants herein contained.
5. The Debtor and the Surety hereby declare that the said property is free from all encumbrances.
6. That it is hereby agreed and declared that in case of failure on the part of the Debtor to pay the instalments in time, the Creditor shall be entitled to dispose of the mortgaged property, in part or in full, to recover the principal amount and interest.
We, the above-noted parties, have signed this deed on the date and at the place mentioned above, after fully understanding the contents of this deed, in the presence of the following witnesses.
Name: ____________ Signature: ____________
Address: ____________
(Debtor)
Name: ____________ Signature: ____________
Address: ____________
(Surety)
Name: ____________ Signature: ____________
Address: ____________
(Creditor)
WITNESSES:
1. ________________________
2. ________________________
SCHEDULE OF PROPERTY
____________________________________________
(description of the mortgaged property)
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About this template
What is this template?
This is a tripartite debt instrument that combines a personal guarantee with a simple mortgage. It is not a purely personal loan agreement because it attaches specific real estate as security for the debt. The document includes a default acceleration clause and an express power for the creditor to dispose of the property.
When should you use it?
Use this when a creditor will only provide funds if the debtor provides both a personal surety and a charge over property. If only a personal guarantee is required without a property charge, use a standard Guarantee Agreement instead.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 1 | Loan Advancement and Joint Liability | The Creditor advances a specific principal sum for which the Debtor and Surety accept joint and several liability. |
| 2 | Repayment Schedule | The parties must repay the debt in four equal half-yearly instalments including interest at 18% per annum. |
| 3 | Acceleration on Default | Any failure to pay an instalment or interest makes the entire outstanding balance immediately payable by both Debtor and Surety. |
| 4 | Grant of Simple Mortgage | The Debtor and Surety transfer the property described in the Schedule to the Creditor as security for the principal and interest. |
| 5 | Declaration of No Encumbrances | The Debtor and Surety warrant that the mortgaged property is currently free from any existing legal claims or charges. |
| 6 | Right of Sale | The Creditor is authorized to sell the mortgaged property to recover principal and interest if the Debtor fails to pay on time. |
Who it's for
- a lender requiring both a personal guarantor and a property charge to secure a cash loan
- a borrower offering a third-party surety to support a secured loan application
- parties arranging a loan with 18% interest and half-yearly repayment instalments
How long it runs and how it's signed
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