Legal Definitions - collateral mortgage

A collateral mortgage is a type of mortgage that is used as security for a loan or debt. It is a legal agreement where the borrower pledges their property as collateral to the lender. If the borrower fails to repay the loan, the lender can take possession of the property and sell it to recover the debt.

For example, if a person wants to buy a house but does not have enough money, they can take out a collateral mortgage. The lender will provide the money to buy the house, and the borrower will pledge the house as collateral. If the borrower fails to repay the loan, the lender can take possession of the house and sell it to recover the debt.

Another example is a business owner who needs a loan to expand their business. They can take out a collateral mortgage by pledging their business property as collateral. If the business fails to repay the loan, the lender can take possession of the property and sell it to recover the debt.

In summary, a collateral mortgage is a legal agreement where the borrower pledges their property as collateral to the lender to secure a loan or debt.