Finesentence mobile logo
Sign in Login / Register

Hypothecate: meaning, definitions and examples

🏦
Add to dictionary

hypothecate

 

[haɪˈpɒθɪkeɪt ]

Definition

Context #1 | Verb

financial context

To hypothecate means to pledge property as security for a loan without giving up possession of it. This practice is common in mortgage financing and allows a borrower to retain ownership of the asset while still providing collateral to the lender.

Synonyms

collateralize, mortgage, pledge.

Examples of usage

  • The homeowner decided to hypothecate her property to secure a home equity loan.
  • The bank required the company to hypothecate its assets before providing the necessary capital.
  • He chose to hypothecate his stocks instead of selling them for quick cash.
  • In some cases, businesses hypothecate inventory to obtain short-term financing.

Interesting Facts

Etymology

  • Originates from the Greek word 'hypothetikos,' meaning 'assumptive' or 'theoretical.'
  • The word was adapted into English in the early 19th century, gaining specific legal and financial meanings.

Legal Context

  • Hypothecation allows individuals to keep possession of their property while using it as collateral for a loan.
  • This practice is common in mortgage agreements, where the property is hypothecated to secure the mortgage.

Finance

  • This term is used frequently in banking and finance, especially in secured lending.
  • It enables borrowers to leverage their assets to obtain funds without transferring ownership.

Cultural Significance

  • In some cultures, the practice of hypothecation reflects trust in interpersonal relationships, as it often involves relatives or friends.
  • In modern economies, it plays a critical role in the functioning of credit markets and economic growth.

Literary References

  • The concept appears in various financial literature, illustrating the balance between risk and security.
  • It is often discussed in business strategy contexts, emphasizing the importance of asset management.

Word Frequency Rank

Ranking #35,760, this word is encountered relatively rarely in everyday English. It might appear in literary works or specialized texts but isn't essential for general communication.