Mortgage vs. Hypothecation — What's the Difference?

The charging of real property by a debtor to a creditor.

Offering assets as collateral without surrendering them.

A conveyance of an interest in property.

Pledging an asset as a means to secure a loan.

A legal agreement where property is security for debt.

A pledge of goods as security for a debt.

A loan secured by the collateral of some real estate.

A right of a lender over the borrower's assets.

A legal agreement by which a bank, building society, etc. lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt

Granting a lien or right on assets without transfer.

Convey (a property) to a creditor as security on a loan

Hypothecation is the practice where a debtor pledges collateral to secure a debt or as a condition precedent to the debt, or a third party pledges collateral for the debtor. A letter of hypothecation is the usual instrument for carrying out the pledge.

A loan for the purchase of real property, secured by a lien on the property.

To pledge (property) as security or collateral without delivery of title or possession.

The document specifying the terms and conditions of the repayment of such a loan.

Usage Problem To hypothesize.

The repayment obligation associated with such a loan

The use of property, or an existing mortgage, as security for a loan, etc.

The right to payment associated with such a loan

(British) A tax levied for a specific expenditure.

The lien on the property associated with such a loan.

The act or contract by which property is hypothecated; a right which a creditor has in or to the property of his debtor, in virtue of which he may cause it to be sold and the price appropriated in payment of his debt. This is a right in the thing, or jus in re.

To pledge (real property) as the security for a loan.

A contract whereby, in consideration of money advanced for the necessities of the ship, the vessel, freight, or cargo is made liable for its repayment, provided the ship arrives in safety. It is usually effected by a bottomry bond. See Bottomry.

To make subject to a claim or risk; pledge against a doubtful outcome

(legal) A special form of secured loan where the purpose of the loan must be specified to the lender, to purchase assets that must be fixed (not movable) property, such as a house or piece of farm land. The assets are registered as the legal property of the borrower but the lender can seize them and dispose of them if they are not satisfied with the manner in which the repayment of the loan is conducted by the borrower. Once the loan is fully repaid, the lender loses this right of seizure and the assets are then deemed to be unencumbered.

(obsolete) State of being pledged.

To borrow against a property, to obtain a loan for another purpose by giving away the right of seizure to the lender over a fixed property such as a house or piece of land; to pledge a property in order to get a loan.

To pledge and make liable; to make subject to obligation; to achieve an immediate result by paying for it in the long term.

A conveyance of property, upon condition, as security for the payment of a debt or the preformance of a duty, and to become void upon payment or performance according to the stipulated terms; also, the written instrument by which the conveyance is made.

State of being pledged; as, lands given in mortgage.

To grant or convey, as property, for the security of a debt, or other engagement, upon a condition that if the debt or engagement shall be discharged according to the contract, the conveyance shall be void, otherwise to become absolute, subject, however, to the right of redemption.

Hence: To pledge, either literally or figuratively; to make subject to a claim or obligation.

A conditional conveyance of property as security for the repayment of a loan

Put up as security or collateral

The deed by which such a transaction is effected.

No, hypothecation can apply to any movable assets, like machinery or stock.

The lender can take possession of the mortgaged property and sell it to recover dues.

Yes, you can live in your mortgaged house, but the lender has a claim until repayment.

Yes, you retain possession and use of a hypothecated asset like a car.

No, a mortgage is specific to real estate, while hypothecation deals with movable assets.

Hypothecation allows borrowers to use assets as collateral while retaining possession.

Yes, home loans are typically mortgages with the house as collateral.

Both are common but used in different scenarios: mortgages for real estate and hypothecation for movable assets.

Yes, a company can use its inventory for hypothecation to secure financing.

No, it transfers an interest in the property as security but not ownership.

In a mortgage, the lender has a claim on the property; in hypothecation, the borrower retains full possession.

Yes, stocks or bonds can be hypothecated in certain lending arrangements.

Yes, if a borrower defaults, the lender has the right to take and sell the hypothecated asset.

The hypothecation agreement ends, and the lender's right over the asset is terminated.

Land is typically mortgaged, not hypothecated, as hypothecation deals with movable assets.