Pledger

A pledgor is a person or company that pledges their assets as security (collateral) to obtain a loan from a lender.

In other words, the pledgor pledges their assets or movable property as a guarantee for one or more loans. This can be done either physically or administratively.

In this article, we focus on what it means to be a mortgagor and the different types of mortgages.

Why become a pawnbroker?

You often become a pawnbroker because the bank or lender requires it - either as part of their general conditions or to secure the loan repayment.

It is rare that you suggest becoming a mortgagor yourself. Often it is a requirement from the lender.

Becoming a guarantor may be necessary to get approved for a loan. Refusing to become a guarantor may result in the rejection of your loan application.

What can be pledged?

Basically anything can be pledged, but the lender will often require the asset to have a value. In practice, assets such as real estate, valuable art, intellectual property and the like are often used as collateral.

Types of mortgages

There are basically two types of pledge: hand pledge and sub-pledge. As a pledgor, you can pledge your assets or movable property as collateral in these two ways.

Hand pledge

Pawn is when the lender physically stores the pledged asset, such as an expensive watch, painting or other items that can be safely stored.

Liens are often costly for the lender to administer as they have to store and look after the asset.

Read more about pledges

Undercollateral

Underpant is probably the most common form of mortgage in Denmark. Here, the lender does not have physical possession of the pledged asset, but the collateral is registered administratively, typically through land registration.

Mortgages are often used in connection with real estate loans. Here, the property remains in the possession of the borrower, while the lender has the mortgage registered as security.

Banks and mortgage lenders usually take a mortgage on properties when granting loans for real estate, but it can also be used for other types of loans. Mortgages are historically a strong and administratively simple security for the lender.

Read more about mortgages

Remember to take out a mortgage if you are a lender

All forms of debt and credit carry a risk of non-payment. Although it rarely happens, the risk is still present.

That's why it's always a good idea to take out a mortgage on the borrower's assets, such as a car, boat or house - either as a mortgage or sub-mortgage.

By mortgaging the borrower's assets, you as a lender have a guarantee that all or part of the loan can be covered if the borrower is unable to pay the debt or installments.