What is the term for pledging a property as security for a loan?

The term for pledging a property as security for a loan is hypothecation. This process allows a borrower to use their property as collateral without having to give up ownership. In a hypothecation agreement, the borrower retains the right to use the property while the lender holds an interest in it as security for the loan. This is common in various types of loans, including mortgages, where the property itself secures repayment, allowing the lender to claim the property if the borrower defaults.

In contrast, liability refers to the borrower's obligation to repay the debt and does not specifically relate to the use of property as collateral. An encumbrance is a broader term that refers to any claim, lien, charge, or liability attached to a property that may affect its transferability or value, but it does not specify the act of pledging the property for a loan. Leasehold represents a type of property interest where one party leases land or property from another, which also does not align with the concept of using property as security for a loan.