Legal Definitions - second mortgage

A second mortgage is a type of mortgage that is subordinate to a first mortgage on the same property, but is senior to any later mortgage. This means that if the property is sold or foreclosed, the first mortgage will be paid off before the second mortgage.

For example, if a homeowner has a first mortgage of $200,000 and takes out a second mortgage of $50,000, the second mortgage will only be paid off after the first mortgage is fully paid. If the property is sold for $250,000, the first mortgage will be paid off in full and the remaining $50,000 will go towards paying off the second mortgage.

Second mortgages are often used to borrow against the equity in a property. For instance, if a homeowner has paid off a significant portion of their first mortgage, they may be able to take out a second mortgage to finance home improvements or other expenses.