Distinguish between Mortgage and Pledge?
Mortgage and pledge are often used and freely interchanged, when used in common parlance. However, they have very big differences.
Pledge and mortgage differ in several ways and here is the difference between the two.
(1) Movable and immovable assets - You always say, "I pledged my shares", you never say that "I mortgaged my shares". So, pledge is used for movable assets like shares, securities, fixed deposits etc. On the other hand, you would never say, "I pledged by apartment". So, in short, mortgage is a term that is used for fixed assets like land, buildings, apartments etc.
(2) Ownership - When you pledge your shares, they would still remain with you and you would be entitled to dividends etc. However, when you mortgage your apartment, the documents would remain with the lender. It could either be banks or any other lending institution. Though in this case you would be free to rent your apartment.
• Pledge vs Mortgage
> Meaning -
Pledge is the method of creating a charge over movable properties.
Mortgage is the method of creating a charge over immovable properties.
> Defined Under -
Pledge, Section 172, Indian Contract Act 1872
Mortgage, Section 58, Transfer of Property Act 1882.
> Assets/Property -
Pledge is a Movable Assets
Mortgage is a Immovable Assets.
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