The Most Preferred Security: Mortgage

A pledge established on real estate is referred to as either a mortgage or a hypothec (hypotheca). In this article, pledge on real estate as a mortgage under Turkish law is discussed as it is the kind of security most preferred by creditors to guarantee an extended loan.

I. Types of Mortgages

Turkish law separates mortgages into two groups: (i) principle amount mortgages, and (ii) limited amount mortgages.

(i) Principle Amount Mortgage

A principle amount mortgage is established to secure an existing debt in a determinable amount. It also functions as a mortgage holder's acknowledgment of an unconditional debt. Regardless of the total amount to be collected on a mortgage, a principle amount mortgage limits collectible items to the following: