Definition of Piggyback mortgage:
A piggyback mortgage is additional debt that can include any additional mortgage or loan beyond a borrower’s first mortgage loan, which is secured with the same collateral. Common types of piggyback mortgages include home equity loans and home equity lines of credit (HELOCs).
Second mortgage taken by home mortgage borrower at the same time as the first mortgage, often used to eliminate private mortgage insurance payments by lowering the loan-to-value ratio of the primary mortgage to below 80%. Generally, borrower pays 10% of the property value in the down payment, 80% is covered through the primary mortgage and 10% is covered by the piggyback mortgage.
Piggyback mortgages can serve several purposes. Some piggyback mortgages are allowed to help a borrower with a down payment. Generally, most borrowers will only have the capacity to take on one or two piggyback mortgages since all of the loans are secured with the same collateral.
How to use Piggyback mortgage in a sentence?
- Examples include second mortgages, home equity loans, and HELOCs.
- Piggyback mortgages are used to help with covering down payments on a property or to avoid paying PMI.
- A piggyback mortgage is any additional loan taken out on a property following a first mortgage.
Meaning of Piggyback mortgage & Piggyback mortgage Definition