Collateral

Collateral is an asset pledged to secure a loan, giving the lender legal claim to seize and sell the asset if the borrower defaults, with the property itself serving as primary collateral in mortgage financing.

Collateral TypesMortgage Context
PrimaryProperty being financed
AdditionalOther properties or securities
Cross-collateralMultiple properties securing one loan
Liquid securitiesStocks, bonds as supplementary
Lender RightsSecurity Position
First chargeRecorded with DLD
Foreclosure powerSale rights upon default
Value monitoringPeriodic revaluation possible
Release conditionsFull loan repayment
Valuation ConsiderationsFactor
Loan amount65-80% of collateral value
Value fluctuationMarket risk affects security
Forced sale discount20-30% below market typical
Multiple assetsCombined value assessed


Related Terms

Mortgage (Residential)Green MortgageCommercial MortgageMortgage CapMortgage InsuranceMortgage TermMortgage Processing FeeFloating Rate MortgageFixed Payment MortgagePre-Approval (Mortgage)Buy-to-Let MortgageLoan-to-Value (LTV)Lien ReleaseForeclosureCross-Collateralization

RERA licensed advisors

Banner Image

Free expert advice

Get property recommendations matched to your goals. No pressure. No commitment.