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A
mortgage that is in second position to the first mortgage. The
second mortgage is "junior" to the first meaning that if the
property goes into foreclosure, the first mortgage must be paid
in full before the second mortgage holder is entitled to be
paid.
A
second mortgage loan can be used to reduce the cash down payment
for your purchase of property. For example, if you’re buying a
house for $100,000 and your down payment is $20,000, you can
reduce that down payment to $10,000 by getting another mortgage
for $10,000. Usually the second mortgage will have a higher
interest rate because it involves a greater risk to the lender
since any proceeds from the property go first to pay off the
first mortgage.
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