Definition

The act of using property as security for a loan, where the property remains in the borrower's possession but can be claimed by the lender if the loan is not repaid.

Example

The bank required hypothecation of the house before approving the loan.

Conversation

Have you ever heard of hypothecation before?

Yeah, I think it has to do with using property as loan security, right?

Exactly! It's often used in mortgages to secure loans.

That makes sense; I guess it helps lenders feel more secure.

Synonyms & Antonyms

Root Explanation

Hypothecation is formed from "hypo-" (meaning under) and "theke" (from Greek "thēkē", meaning a deposit or place). The term refers to the act of placing an asset as security for a debt without transferring ownership, thus placing it 'under' a claim.

Memory Tip

Think of placing something 'under' ('hypo-') as a security or 'deposit' ('theke') for a loan — that's what hypothecation means.

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