Cash is often in high demand and low in supply, and keeping the money rolling all year long is a difficult task. Due to this, many people take a mortgage on their property to fulfill need for cash. The concept of a mortgage is quite simple: get money in lieu of any property or real estate possession. Once the loan amount is returned, the possession is reclaimed by the borrower. This is a basic transaction of mortgage, but there are different kinds of mortgages and they all function in slightly different ways.

What is a ’chattel’ and what are chattel mortgages?

A ‘chattel’ is any kind of personal property that is movable or otherwise mobile. In legal terms, a chattel mortgage is a loan based on the possession of the said goods or property. In a traditional mortgage, the lender can claim the mortgaged property only if the borrower defaults on the payment. If the installments are paid on time, then there is no reason to worry, and the borrower can keep the money as well as the mortgaged item in possession. In a chattel mortgage, however, the borrower gives up the possession of the item or property to the lender until the full loan amount is recovered.

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Listed below are some of the most salient features of the chattel mortgage scheme.

• Flexibility: Chattel mortgages can be a lot more flexible than traditional mortgages as they are applicable to items that can be easily moved. This gives a much wider coverage as long as the worth of the property covers the loan amount.
• Security: From the borrower’s as well as the lender’s perspective, a chattel mortgage is very secure as long as the value of the mortgaged property is calculated properly. In case of non-payment, the lender is recovers the dues by the resale of the mortgaged property. If the property is misplaced or damaged by the lender after the mortgage is validated, the borrower is covered for the full amount of the property.
• Civility: Traditional mortgages between two parties, especially between two individuals, can result in some very ugly outcomes in case of a default. This often leads to bitterness, altercations, lawsuits, and s on. In a chattel mortgage, there are no such cases. The lender owns the property until the loan is recovered. In case of a default, they can auction the mortgaged property.

Popular assets to which chattel mortgages are applicable
A chattel mortgage offers a wide scope of operation and can be placed virtually on any possession of value. However, some of the most popular ones include mortgages of jewelry, business equipment such as heavy machinery, and mobile homes. While a fixed landed property qualifies for a traditional mortgage, in case of mobile homes, the borrower does not own the land on which the property is. In such a case, the mobile home is treated as a chattel so that the loan is valid even if the house is relocated. The same goes for heavy machinery that has a long life and also for jewelry, which often increases in value over time.

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