Definition of Second mortgage:
Loan secured by the home owners equity (market value of the property less balance on the first mortgage) in a property that is already mortgaged. Second mortgages are junior (subordinate) to the first mortgage and, in case of a foreclosure sale, are paid out only after the full satisfaction of the first mortgage. Both mortgages run concurrently and, typically, the second mortgage has shorter maturity period than the first one.
Since the second mortgage would receive repayments only when the first mortgage has been paid off, the interest rate charged for the second mortgage tends to be higher and the amount borrowed will be lower than that of the first mortgage.
A mortgage taken out on a property that is already mortgaged.
A second mortgage is a type of 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.
How to use Second mortgage in a sentence?
- HELOCs are often used as second mortgages.
- What struck me was the number of people whose home was under threat from a second mortgage or secured loan.
- Homeowners might use a second mortgage to finance large purchases like college or a new vehicle.
- A second mortgage is a loan made in addition to the homeowner's primary mortgage.
Meaning of Second mortgage & Second mortgage Definition