Definition of Junior mortgage:
A junior mortgage is a mortgage that is subordinate to a first or prior (senior) mortgage. A junior mortgage often refers to a second mortgage, but it could also be a third or fourth mortgage (e.g. home equity loans or lines of credit (HELOCs)). In the case of a foreclosure, the senior (first) mortgage will be paid down first.
Second (or third) mortgage that is subordinate to the previous (senior) mortgages on the same property. In case of a default by the mortgagor (borrower), the senior mortgagee(s) will have to be paid off first, before the junior mortgagee(s) can get any money from the proceeds of the mortgaged propertys sale. For this reason, junior mortgage interest rates are usually higher.
A junior mortgage is a subordinate mortgage made while an original mortgage is still in effect. In the event of default, the original mortgage would receive all proceeds from the liquidation of the property until it is all paid off. Since junior mortgages would receive repayments only when the first mortgage has been paid off, the interest rate charged for a junior mortgage tends to be higher and the amount borrowed will be lower than that of the first mortgage.
How to use Junior mortgage in a sentence?
- Junior mortgages often carry higher interest rates and lower loan amounts, and may be subject to additional restrictions and limitations.
- Homeowners may seek a junior mortgage to finance large purchases like a home remodel, college tuition, or a new vehicle.
- A junior mortgage is a home loan made in addition to the property's primary mortgage.
- Home equity loans and HELOCs are often used as second mortgages.
Meaning of Junior mortgage & Junior mortgage Definition