Personal property is any type of property that can be used as an asset, other than real estate. The difference between personal property and real estate is that the former is basically movable and not fixed in a single place, while the latter refers to buildings, houses, and land. Examples of personal properties are vehicles, furniture, boats, and any form of collectibles like comics or statues.
Under common law systems, a system of unwritten laws based on the exemplars established by the courts, it is possible to place a mortgage on real property. Since the lender has the rights to this specific property, it becomes an extension of credit as a form of security.
However, it is more difficult for a lender to secure personal property as it is a movable piece of property. As a common law system allows, liens on personal property to protect the creditor’s rights are less secure since the debtor can simply take the property that was used as collateral and move to another country.
Personal Property as Assets
Personal property is still considered an asset and can be used as collateral whenever you want to apply for a mortgage to purchase a piece of land. It can be anything of value such as furniture, clothes, and vehicles. Such items depreciate over time, however. What will increase in value over time are antiques and limited edition collectibles.
For an assessment of creditworthiness, lenders will consider the total of the personal property used as collateral added to the real property and monetary assets.