If the debtor fails to fulfill his obligations on time, the pledged property is foreclosed. By lending against security, banks have a lower risk of default. This usually allows them to lower the interest rate and increase the amount borrowed. That's why it's worth doing Mortgage Broker Coventry beforehand. Regardless of what kind of property is pledged as collateral for the loan. Failure to repay a debt does not mean it becomes the lender's property. In the case of real estate, the lender is legally obliged to go to court. Other property may be regulated in the contract by agreement between the parties.