Pantry

A pledge is a security interest in an asset to cover an obligation, typically a financial balance or a loan.

In Denmark, thousands of kroner are pledged every day as collateral for loans, compensation or other financial obligations.

When a mortgage is taken out on real estate in Denmark, it can be viewed on Tinglysning.dk. Different types of mortgages are displayed here, such as mortgage deeds, owner mortgages or tax mortgages.

Different types of mortgages

In legal terms, there are several types of pledges, characterized by their method of pledging, such as hand pledges and sub-pledges.

A pledge refers to a situation where the pledgee physically holds an asset as collateral, for example for a loan. This can include anything from watches and jewelry to other valuable assets.

A sub-mortgage is a registered form of mortgage, which secures the collateral of the mortgagee.

Although there are no official statistics on the use of different pledging methods in Denmark, it is widely believed that sub-mortgages are the most commonly used method, as banks and mortgage lenders typically prefer this form of security.

What can be mortgaged?

In principle, anything that a borrower owns or has at its disposal can be pledged as collateral. This includes both tangible and intangible assets, provided they represent value and thus can be used as collateral for the loan or obligation.

Mortgage

A mortgage deed is a legally valid document that is registered to provide a lender with security for the loan of a property.

Chattel mortgage

Chattel mortgages are mortgages on movable assets, i.e. assets that are not real estate. Movables can include a wide range of items such as art, inventory and means of production.

Pledge or attachment

Legally, pledges and attachments are almost identical in that both are used to obtain security for a financial obligation. A pledge is agreed between two parties, usually a borrower and a lender.

The attachment is initiated when an invoice is not paid, for example, and can include both tangible and intangible assets, such as a house. The attachment is carried out with the assistance of the bankruptcy court, and it is common for attachments to be made primarily on real estate whenever possible.

It is possible for a bank to have both an attachment and a mortgage on a property. The mortgage is taken out at the start of the loan, while an attachment typically occurs when the borrower has not paid interest or repayments. In the order of priority, a mortgage typically comes before an attachment. This information can be found on Tinglysning.dk for mortgages on real estate.