Which mortgage type is based on the mortgagor's equity in the property?

The mortgage type that is based on the mortgagor's equity in the property is the equitable mortgage. An equitable mortgage is created when there is an agreement between the lender and borrower that may not align with formal, traditional mortgage requirements, often using a deed or a formal contract. This type of mortgage acknowledges the borrower's ownership interest in the property, which is influenced by the equity they have built up.

Equity in real estate refers to the difference between the property's market value and the outstanding mortgage balance. An equitable mortgage allows the borrower to leverage this equity for loans, often without needing the strict requirements of a legal mortgage. This can be beneficial for those who have accumulated significant assets in their property but may not have the full documentation typically required for a conventional mortgage.

In the context of the other options, a legal mortgage is a more formal arrangement, typically requiring strict compliance with legal documentation and procedures. A chattel mortgage specifically pertains to movable personal property rather than real estate. An adjustable-rate mortgage relates to fluctuating interest rates rather than equity considerations. Thus, equitable mortgages stand out as the type where the focus is on the mortgagor's equity in the property, providing flexible lending terms based on the value already invested in the real estate