Define: Hypothecation

UK Accounting Glossary

Definition: Hypothecation

What is the dictionary definition of Hypothecation?

Dictionary Definition

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.

  1. The use of property, or an existing mortgage, as security for a loan, etc.
  2. British A tax levied for a specific expenditure


Full Definition of Hypothecation

A collateralising arrangement in which neither the possession nor the title but only the right to sell an asset or property passes on to the creditor or lender (called a grantee). An arrangement where the grantee has the possession and right to sell, but not the title, is called pledging.


Synonyms For Hypothecation

mortgage, collateral, hypothecated, pledge, lien

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Hypothecation. Payroll & Accounting Heaven Ltd. February 24, 2020
Chicago Manual of Style (CMS):
Hypothecation. Payroll & Accounting Heaven Ltd. (accessed: February 24, 2020).
American Psychological Association (APA):
Hypothecation. Retrieved February 24, 2020, from website:

Definition Sources

Definitions for Hypothecation are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 17th January 2020.