Provided you have the legal right of the property it doesn't matter. What really really matters is the ownership being runner stamped. Then the company or banking institution will definitely offer loan to the seeker, provided the terms are met. But, if you know, you wouldn't meet up with the repayment interest, then you shouldn't proceed to take the loan to avoid the costly penalty that is associated with failure to meet deadline. Such collateral can be frozen because it is under written agreement with the money lenders or banking institution. That's why it is advisable to go for money we can afford to meet up without crossing the deadline of repayment.