If a borrower is looking to purchase a movable piece of equipment or modular home, then a chattel mortgage could turn out to be a good option.
When a borrower wants to purchase a home that isn’t permanently attached to the land then this type of loan is often used.
A loan process where an object of the movable personal property acts as security for a loan is called a chattel mortgage.
The loan is guaranteed by the movable property, or chattel, and the lender holds an ownership interest in it.
In a conventional mortgage, the loan is secured by a lien on the real stationary property, but a chattel mortgage is different from it.
In some areas of the U.S., chattel loans are referred to as security agreements.
The chattel mortgage is addressed by different names like personal property security, a lien on personal property, and sometimes as ‘movable hypothec’ in other parts of the world.