Second Mortgage Loans

Second Mortgage Loans

Second Mortgage is a kind of kind of secured home loan against your property. If you already have a primary mortgage against a property and then take an additional mortgage loan against the same collateral then it will be called a second mortgage. The loan which is registered in the County Register Office first is called “First mortgage” and the loan which is registered after that is called “Second Mortgage”. The same property can have multiple liens like third or even forth loan.

A second mortgage is subordinate to the first mortgage loan. If you defaults in your loan then you need pay off your First mortgage Lender and then you will have to pay the second mortgage lender. That is why the second mortgage is considered risky to the lenders and as a result, the interest rate of the second mortgage loan is higher than the first mortgage loan.

If you default in your second mortgage loan payments then the second mortgage lender can also foreclose because second mortgage is a secured loan. In that case, the lender will have to buy out the first mortgage lender as the first mortgage lender needs to pay off first and then he can sell the property and get his money back.

You can think about getting a second mortgage loan only if you are in dire need or need some easy cash. Suppose you need to pay medical bills or your kids tuition fees or you may need to pay the credit card debts, then you can go for second mortgage.

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