Mortgage: Mortgage is a type of charge related to immovable property. Immovable property shall include land, benefits to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth. It does not include standing timber, growing crops or grass.
Pledge: Pledge arises
when the lender (pledgee)
takes
possession of either
the
goods
or bearer
securities
for extending a credit facility to the borrower (pledgor). The pledgee can retain the possession of
the goods until the pledgor
repays the entire debt amount and in case of a default, the pledgee has the right to sell the goods in his possession and adjust its proceeds towards the amount
due.(example Jewel loan).
Hypothecation: Hypothecation
is a way of
creating a charge against the security
of movable assets, which is
much similar
to
pledge.(example purchasing a bike from
bank loan). The possession and the ownership remain with the borrower. Since the possession remains with the borrower, he may, at any time either create
a subsequent charge by way of
pledge over
same goods or may sell them. In such
cases, the rights
of
the pledgee usually super cedes the rights of
the person in whose favor
the
goods were hypothecated, if the fact of existence of such a
charge is not known to the subsequent pledgee.