Hypothecation in real estate is the use of the real property to secure a loan or other financial obligation. The borrower pledges the property as collateral for the debt, giving the lender the right to take possession of the asset if the borrower fails to repay the loan. Hypothecation can be an effective way to get approved for a large loan or enhance financing terms. For example, borrowers who Hypothecate their home as collateral for a business loan may be able to secure a lower interest rate than they would without Hypothecation. However, Hypothecation also carries some risk. If the borrower defaults on the loan, they could lose their home. As a result, it's important to consider all options before entering into a Hypothecation agreement.