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

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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.


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Synonyms For Hypothecation


mortgage, collateral, hypothecated, pledge, lien


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Hypothecation. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/hypothecation/ (accessed: February 24, 2020).
American Psychological Association (APA):
Hypothecation. PayrollHeaven.com. Retrieved February 24, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/hypothecation/

Definition Sources


Definitions for Hypothecation are sourced/syndicated and enhanced from:

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

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