A legal mortgage is the most secure and comprehensive form of security interest. It transfers legal title to the mortgagee and prevents the mortgagor from dealing with the mortgaged asset while it is subject to the mortgage. However, legislation has affected the characteristics of a legal mortgage over land.

A mortgage of Torrens land which, although regarded as a legal mortgage, does not involve a transfer of title but takes effect as a security (see section 57(1), Real Property Act 1900 (NSW), section 74(2), Transfer of Land Act 1958 (Vic) and their equivalent in other jurisdictions). Even though title is not transferred to the mortgagee (as it is with a mortgage of other assets), this type of security interest gives the mortgagee equivalent rights.

An equitable mortgage arises where the formalities to create a legal mortgage have not been completed or where the asset being mortgaged is only an equitable interest. An equitable mortgage only transfers a beneficial interest in the asset to the mortgagee with legal title remaining with the mortgagor.