A loan taken out against your home while your original mortgage is still in place — it takes second priority in repayment if you default.
Full Definition
A second mortgage is any loan secured by a property that already has an existing (first) mortgage. In a foreclosure, the first mortgage lender is paid first from sale proceeds; the second mortgage lender only gets paid if funds remain. Because of this higher risk, second mortgages typically carry higher interest rates than first mortgages. Common types include home equity loans and HELOCs. Second mortgages are sometimes used in 'piggyback' structures (e.g., 80/10/10) to avoid PMI on a primary mortgage.
Related Terms
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